### Summary
European stock markets edged higher, supported by a drop in German producer prices and a smaller-than-expected rate cut from China. German producer prices fell significantly in July, indicating a retreat in inflationary pressures. The European Central Bank is considering a pause in its hiking cycle, which could help alleviate economic difficulties in Germany. In China, the rate cut announced by the People's Bank of China was seen as underwhelming, as analysts had expected a larger cut. The U.K. housing market also slumped, with the fastest decline in August since 2018. Oil prices rebounded, supported by the Chinese rate cut and expectations of lower output from top producers in August.
### Facts
- 📉 German producer prices dropped 1.1% in July and fell 6.0% annually, indicating a retreat in inflationary pressures.
- 🇩🇪 Economic difficulties in Germany are affecting the eurozone's growth and may lead to a recession.
- 🏦 ECB President's speech at Jackson Hole will provide clues on the central bank's next move in September.
- 🇨🇳 The People's Bank of China announced a smaller-than-expected rate cut, disappointing analysts.
- 🏘️ The U.K. housing market experienced its fastest decline in August since 2018.
- 🛢️ Oil prices rose due to the Chinese rate cut and expectations of lower output from top producers.
The downturn in Germany's residential construction sector worsened in July, with a record number of companies reporting dwindling orders, as higher interest rates and rising construction costs hamper new business.
Germany's business activity has seen a sharp decline, leading to concerns of a recession, as the country's Purchasing Managers' Index (PMI) dipped to its lowest level in over three years. This decline in activity is impacting the wider eurozone economy as well, with the region at risk of slipping into recession. This economic downturn is accompanied by a worrying uptick in inflation and slow growth, particularly in Germany.
The U.S. housing market is currently experiencing a decrease in affordability due to high mortgage rates and stubbornly high prices, with affordability levels lower than during the 2006 housing bubble; however, experts do not predict a crash in the market due to a shortage of homes and a more stable lending environment.
Mortgage rates have reached a 22-year high and are expected to continue rising, which will further challenge affordability and slow home sales. Additionally, the high rates are increasing the number of all-cash buyers in the housing market. On the other hand, rents have decreased for a third consecutive month, providing some relief for renters.
Despite high interest rates, house prices in the US have not declined, leading to frustration and confusion in the housing market as buyers face fierce competition and limited inventory.
British house prices in August 2023 experienced their biggest annual decline since July 2009, falling by 5.3% due to higher interest rates reducing buyer demand, according to mortgage lender Nationwide.
The recent downturn in global property prices is ending as average home prices are expected to fall less than anticipated and rise into 2024, according to a Reuters poll, due to factors such as high savings, limited supply, and rising immigration. However, this poses challenges for first-time homebuyers and rental affordability is expected to worsen.
The number of homes for sale in the US continued to decline in August, down by 9.2% compared to the previous year and 45% below pre-pandemic levels, leading to higher home prices and affordability concerns.
Home prices, which had been steadily rising since January, may be starting to decline again due to weakening month-to-month gains and higher mortgage rates.
Germany, once hailed as Europe's economic powerhouse, is now facing structural problems and could be on the verge of decline, according to experts, with factors such as stagnant GDP, high inflation, an aging population, overdependence on exports, and underinvestment contributing to its current predicament.
The current housing market has defied expectations of a downturn in real estate prices caused by surging mortgage rates, with prices and demand remaining strong due to increasing household formation among baby boomers, according to a Wall Street economist.
Mortgage rates remain elevated, slowing housing market activity, and while home prices are not likely to fall significantly, rates are projected to decrease in 2023 and 2024.
The housing market is facing challenges due to a lack of inventory, high mortgage rates, and buyer hesitancy, leading to a decrease in sales and mortgage applications, while prices remain high and inventory levels decline.
The crisis in Germany's residential construction sector is worsening, with a record number of companies reporting cancelled projects due to high costs and a lack of orders.
China's housing crisis continues as thousands of building projects are halted or slowed, leading to defaults and restructuring, a loss of confidence in the market, and a decline in sales.
More than a third of homes for sale in the UK have experienced price cuts, the highest proportion in over a decade, suggesting that some sellers were initially too optimistic about their asking prices, according to property website Rightmove. The average size of the reduction is also the largest since January 2011 at 6.2%, with the typical cut amounting to £22,709. The housing market has been affected by a slump following consecutive interest rate rises, although there are signs of activity starting to pick up.
US housing starts fell to their lowest level in three years, indicating a slowdown in homebuilding activity due to mortgage rates lingering above 7%.
The housing market is facing challenges due to high mortgage rates and low home sales, leading economists to predict a mild recession in 2024.
The United States housing market has seen a 21 percent decline in previously occupied home sales over the past year, continuing the slowdown caused by rising interest rates, while prices continue to rise despite the decrease in sales, leading to a shortage of affordable homes and worsening home affordability for the foreseeable future.
The global risk of housing bubbles has significantly decreased in 2023, with only two out of 25 cities surveyed being at risk, down from nine in previous reports, due to rising interest rates and the end of cheap financing in the real estate sector.
The rise in housing prices over the past three years can be attributed to a shortage of supply, low volume in the market, and the introduction of mortgage rate buydowns; however, there is now a risk of too much inventory being introduced into the market, and a potential decline in mortgage rates could lead to a large amount of existing homes being sold and a subsequent oversupply.
Germany, once the beating heart of the European economy, is facing structural challenges and a sense of decline, with forecasts predicting slow growth and contraction in the coming years due to its heavy reliance on manufacturing and struggle to transition to renewable energy and a service-based economy.
The property market in Germany is in crisis as rising interest rates and raw material costs lead to a spike in bankruptcies among developers, causing construction projects to halt and leaving homeowners-to-be in financial distress. Chancellor Olaf Scholz is calling for talks with industry leaders to find solutions to jump-start construction and alleviate the growing housing shortage.
Home prices have decreased in several major cities, but many remain overvalued and at risk of entering a housing bubble, according to a UBS report, with Zurich and Tokyo being identified as the most overvalued markets. UBS defines a bubble as a sustained mispricing of an asset, and factors such as price-to-income and price-to-rent ratios were used to determine the rankings. While some cities have seen a drop in prices, a housing shortage could lead to a renewed boom if interest rates fall.
Sales of newly built homes in the housing market decreased by 8.7% last month, indicating that higher mortgage rates are negatively impacting the industry.
Mortgage rates reaching their highest level in almost 23 years are causing a decline in demand for new loan applications.
UK house prices are dropping at the fastest rate since 2009, driven by higher mortgage rates and affordability constraints, but buyer demand and consumer confidence are showing signs of improvement. Lowering mortgage rates could be key to revitalizing the housing market, which is expected to end the year with prices 2-3% lower than at the beginning of the year.
Germany's housing market is experiencing a decline, with residential home prices falling by 9.9% year over year, making cities like Berlin, Leipzig, Munich, and Hamburg attractive for luxury buyers due to their long-term growth potential and more diverse economies.
The housing market is slowing down due to soaring mortgage rates, which could lead to an economic downturn as home construction is curbed and growth prospects falter, according to billionaire investor Bill Gross.
The fall housing market is experiencing a decrease in home sellers and a limited inventory, leading to high prices and limited affordability, although there is some potential for buyers to find more reasonably priced homes.
The housing market is facing challenges as mortgage rates reach their highest level since 2000, leading to a decrease in mortgage applications and pushing potential homebuyers out of the market.
Sentiment in the US housing market declined due to rising mortgage rates, with buyers anticipating higher home prices in the future, according to Fannie Mae data.
The housing market is currently considered overvalued, with homes selling above their long-term prices in most major markets, but experts disagree on whether this indicates a housing bubble or if high prices are justified due to the housing shortage and strong demand. The fear of buying at the peak of the market and concerns about rising mortgage rates are factors influencing buyer decisions, but if rates come down, it could lead to an increase in prices. While there is a possibility of a price correction, most experts do not expect another housing crash like the one experienced during the Great Recession.
The metro Atlanta housing market saw a decline in September due to the highest mortgage rates since 2000, resulting in a decrease in home sales and total value; the market has also experienced a shortage of inventory, leading to a seller's advantage despite rising mortgage rates.
Germany has revised its economic forecast for 2023, projecting a 0.4% decline in GDP due to the energy price crisis, inflation concerns, and weakening global economic partners, such as China.
Germany faces a contraction in economic growth, with the economy expected to shrink by 0.4 percent in 2023, making it the only major world economy to post negative growth figures this year, due to factors including the energy price crisis and weakening global economic partners.
September saw a significant decline in home sales, with the lowest tally since 1995 and a 32 percent drop from the previous year, due to high interest rates and homeowners' reluctance to sell and move to a place with a higher monthly payment, leaving few options for prospective buyers.
Mortgage rates are expected to decrease significantly by the end of 2024, but a shortage of available homes will lead to higher sales prices for the next few years. Despite the drop in rates, the low inventory of new homes will drive up purchase costs. Additionally, a sluggish economy, rising unemployment, and declining inflation may lead to a recession in early 2024. However, the combination of these factors will eventually help bring down mortgage rates further in the following years.
Confidence among builders in the U.S. housing market has fallen for the third consecutive month due to higher mortgage rates, leading to decreased demand for new homes. The National Association of Home Builders/Wells Fargo Housing Market Index dropped to 40, the lowest reading since January 2023, reflecting concerns about buyer traffic and housing affordability.
Home prices rising alongside high mortgage rates have made the housing market the least affordable it has been since the early 2000s, with sellers reluctant to sell and buyers struggling with high spending on housing, leading to low existing-home sales volumes and a "lock-in" effect.
The housing market is expected to experience a downturn in the near future due to factors such as high mortgage rates, high home prices, and limited supply, making it increasingly difficult for homebuyers to afford a home.
Home sales in the US dropped in September to the lowest level in 13 years due to rising interest rates and climbing home prices, making it unaffordable for many potential buyers. The low inventory of homes for sale pushed prices up, with the median price for existing homes reaching a record high of $394,300 last month.
The US housing market is experiencing a significant decline in existing-home sales, with September seeing a 15% drop compared to the previous year, due to factors such as high mortgage rates, low inventory levels, and rising home prices.
The housing market is facing significant challenges, with a 15% drop in home sales leading to a 13-year low, and economists predicting a "deep freeze" reminiscent of the Great Recession of 2010 or the housing recession of the 1980s, while Zillow has revised its forecast for home price growth downward due to higher mortgage rates.
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