The housing market is extremely hot in most developed countries like the US, UK, Australia, and New Zealand, among others. This situation has been caused by a long period of ultra-low interest rates, low inventories, and a surge in demand as people use their Covid-19 savings. With most central banks hiking interest rates, there are concerns about when the crash will happen. So, what is the next housing crash prediction?
InvestingCube's S&R Levels
In Sell Zone
Is the housing market in a bubble?
House prices have risen sharply in most countries. In the UK, data by both Halifax and Nationwide showed that home prices continued their bullish momentum in March. Prices have risen by more than £25,000 in the past 12 months. In London, house prices rose at an annual rate of 7.4% in March, which is the fastest rate since 2016.
The same trend has happened in other countries. For example, home prices have surged in the US, leading many people to warn about the market being in a bubble. Other countries facing this crisis are Australia, Austria, and Canada.
The causes of this crisis are the same. A sustained period of low-interest rates, stimulus spending, and stay-at-home mandates pushed more people to buy property. Moreover, this demand has been fueled by people buying second and third homes in some markets.
At the same time, inventories have been limited because of multiple factors such as shortages. House prices have also surged because of the rising cost of doing business. As a result, items like paint, steel, lumber, and even cement have seen their prices jump sharply.
Next housing crash prediction
Now, with central banks like the Federal Reserve, Bank of England, and Bank of Canada hiking rates, there are concerns about when the next housing crash will happen. Besides, the current market conditions closely resemble what happened in 2006. Also, as home prices jump, there is a likelihood that people who can afford to buy them will continue dropping.
In a statement this week, the Reserve Bank of Australia warned that house prices could plunge by 15% in the next two years. Other industry watchers have shared the same sentiment. For example, most mortgage providers like Better.com and Rocket have seen their businesses struggle lately.
Still, while house prices will remain at elevated levels, it is unlikely that we will see a housing crash similar to that of 2008/9. Still, prices are likely to start falling sharply in the coming months as the Federal Reserve starts hiking interest rates.