In our Market Monday insights, Prosperity Investment Management examines the latest developments across the globe's biggest financial markets - providing you with all the latest information you need to know.
UK house prices are expected to fall by almost 10% over the next couple of years, the Office for Budget Responsibility has predicted.
Following Jeremy Hunt’s autumn statement last week, housing prices are expected to fall and mortgage interest rates are expected to increase.
A drop of 9% is expected between now and autumn 2024, the Office for Budget Responsibility (OBR) has said.
The cost of a mortgage is also likely to stay much higher than homeowners have become accustomed to during the last decade.
A typical two or five-year fixed-rate deal currently has an interest rate of just over 6%.
It is forecast that there will still be an average increase in property prices this year of 10.7% despite the recent slowdown.
That will be followed by two years of falls, with house prices down by 1.2% next year, and 5.7% in 2024.
Then the OBR suggests that property prices will start to rise again at a rate slightly faster than people's incomes - up by 1.2% in 2025, 3% in 2026 and 3.5% in 2027.
US inflation rate drops to 7.7%
US inflation was lower than forecast last month, a welcome sign that the surge in prices may be fading.
The US consumer prices index rose by 7.7% in October, down from 8.2% in September, a bigger fall than expected.
That’s the lowest annual inflation reading since January 2022.
There are signs that inflation is cooling off. Gas prices are down about $0.10 over the past month.
But the inflation rate remains far above the Fed's 2% target, meaning aggressive actions by the central bank are likely to continue.
China’s property sales are set to plunge 30%
China’s property sales will likely drop by about 30% this year - nearly two times worse than their prior forecast.
Such a drop would be worse than in 2008 when sales fell by roughly 20%.
Now with the mortgage strikes, the recovery of China’s real estate sector has been delayed to next year rather than this year.
The suspended mortgage payments could affect 974 billion yuan ($144.04 billion) of such loans - 2.5% of Chinese mortgage loans, or 0.5% of the total loan.
Although the number of mortgage strikes increased rapidly within a few weeks, analysts generally don’t expect a systemic financial crisis.
