Global house prices are forecasted to increase in the next two years, driven by booming demand and limited supply in most countries, according to a recent report from Fitch Ratings. The report predicts nominal home prices will rise in the low to mid-single digits for many nations in 2025 and 2026.
The surge in home prices is primarily attributed to a persistent housing supply shortage, which cannot keep pace with rising demand. Factors such as low unemployment, real wage growth, and falling inflation have boosted disposable incomes, increasing the purchasing power of homebuyers across many regions.
Among the countries expected to see the strongest growth in house prices are the Netherlands, Canada, Brazil, and Mexico. In Canada and the Netherlands, government programs aimed at supporting first-time homebuyers and rising wages are fueling demand. Meanwhile, in Brazil and Mexico, higher construction costs are expected to drive price growth.
In Europe, most countries are experiencing a rise in housing demand, fueled by improving real household incomes in the eurozone. However, France is an outlier, where home prices are expected to decline due to affordability issues and political uncertainty. Despite this, the rate of decline is expected to slow, with prices possibly stabilizing or even increasing by 2026.
The Netherlands is forecasted to see price growth slow slightly, from 13% this year to between 8% and 10% in 2025, with a further slowdown in 2026. Limited housing supply, rising construction costs, and a growing population are expected to continue driving demand. Despite the tight fiscal policy limiting purchasing power, government support programs may further boost first-time homebuyer activity.
In Spain, house prices are projected to rise by 4% to 6% in 2025, continuing the upward trend seen in 2024. The increase is supported by growing consumer confidence due to falling interest rates and lower inflation, as well as a limited supply of new homes, which covers only half of new household formation.
Germany is also expected to experience moderate price growth of 2% to 4% in 2025 and 2026, spurred by increasing rents, which make purchasing more attractive, despite slower wage growth.
Meanwhile, in the UK and Denmark, home prices are projected to rise modestly by 2% to 4%, supported by lower mortgage interest rates and stronger labor markets. In Italy, price growth is expected to be more restrained, ranging from 0.5% to 2.5%, as high mortgage rates dampen demand.
While the report highlights the ongoing pressure on housing supply due to high construction costs and regulatory constraints, it also notes the potential impact of climate change. Increasing demand for energy-efficient homes could shape future market trends, especially with the rising cost of energy.
Overall, while global house prices are expected to rise, various factors, including government policies, interest rates, and economic conditions, will influence the pace and extent of the growth in different regions.
