House prices worldwide are rising faster than inflation for the third quarter in a row, according to the latest report from the International Housing Observatory. The trend points to growing strains in global property markets and raises concerns about affordability, which is increasingly out of reach for many households in major economies.
The report names the Netherlands as the leader in house price growth from July to September 2024, with prices climbing by 3.2%. Spain followed at 1.7%, and the U.K. at 1.3%. The U.S. market saw a modest 0.5% rise, while Canada defied the trend, with prices falling by 2.3%.
Renters are feeling the pinch too. Rents rose in nearly every country studied, with the U.K. again leading the pack with a 1.7% increase over the quarter.
State of the market
The report, produced by the International Housing Observatory at Lancaster University Management School, uses data from the Globalization Institute of the Federal Reserve Bank of Dallas. Since its inception in 2019, the Observatory has provided real-time monitoring of global real estate markets, aiming to help policymakers, economists, and homeowners better understand the housing landscape.
“While rising house prices often reflect a strong economy, unchecked growth can spell trouble,” the researchers warn. Price increases that outpace fundamentals like income and rents can fuel speculative bubbles. If these bubbles burst, the fallout can lead to economic downturns, as seen during the 2008 financial crisis.
The report flags potential risks if rapid price growth continues. “When house prices rise far beyond income levels, markets become vulnerable to crashes and instability,” the authors explain.
Addressing the pressure
Governments worldwide are taking steps to address these pressures, though their approaches vary. Australia and China have rolled out a flurry of incentives, while the U.K. has introduced higher transaction costs through increased stamp duty taxes, which could slow house price growth after April 2025.
But these measures come with trade-offs. In the U.K., for example, higher costs for landlords may push rents even higher as they try to protect their profits. This risks creating a vicious cycle, where rising rents make it harder for tenants to save for a deposit, delaying or preventing home ownership and widening economic inequalities.
“There’s encouraging action being taken globally,” the researchers note, “but it’s clear that housing affordability remains a significant challenge. How governments balance these pressures will shape not just property markets but broader economic stability in the years to come.”
For now, the question of whether today’s housing markets are sustainable—or heading toward trouble—remains unanswered. What’s certain is that both policymakers and households face mounting challenges in navigating these turbulent waters.
