A warning came from Goldman Sachs: The world’s largest asset class is beginning to falter


A US bank Goldman Sachs assessed in his publication on Thursday in the article that the housing boom caused by the corona pandemic is now winding down around the world.

Consumers’ purchasing power has weakened due to interest rate hikes and inflation, and housing sales are not going at their former pace. According to the bank, the downturn in the housing market is a real threat.

Goldman Sachs calculates that apartment sales have decreased by 40 percent from the corona-era buying peak in the United States and halved in Britain.

Falling sales volumes in the housing market can have significant effects, especially for housing investors. According to Goldman Sachs’ forecast, even a 10 percent decrease in housing sales will lead to a slowdown in housing price development by two percentage points in six months.

According to the bank, the part of the economy most dependent on interest rates has clearly slowed down in the United States due to the central banks’ actions at the beginning of the year. Mortgage interest rates have risen since the beginning of the year in the United States and New Zealand by more than 200 percentage points.

Mortgages have become more expensive, and in some countries the Goldman Sachs housing price index is even below the 2008 subprime crisis. In the United States, the index has never fallen this much during the year.

In most of Goldman Sachs’ comparison countries (USA, Canada, Great Britain, New Zealand and France), housing supply has been scarce in recent years. Demand is expected to grow even further in the future, as the working-age population increases, at least in Canada, the United States and France.

Low supply and growing demand can prevent the housing market from collapsing, but due to the rapid weakening of purchasing power and a decrease in housing transactions, Goldman Sachs considers a downturn in the housing market entirely possible.


Source: Arvopaperi by www.arvopaperi.fi.

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