The global housing market will broadly see price appreciation next year, supported by persistent supply shortages and steady, though softening, demand, while arrears should stay low and mostly unchanged from 2025 due to solid labour markets, according to Fitch Ratings.
However, the firm’s Global Housing and Mortgage Outlook added that high inflation in some markets and real income deterioration will present greater challenges to home prices and mortgage performance than the past few years. Slower economic growth, rising unemployment and policy uncertainty are further downside risks to its forecasts.
Fitch reports: ‘Nominal home price growth has slowed this year from the robust increases in 2024. Many countries will see price growth slow further to the low single digits in 2026 as a result of weaker labour markets, lower disposable income and reduced affordability. Nevertheless, supply constraints underpin price growth, which is also reinforced by sticky or modestly lower mortgage rates that draw potential buyers into the market.’
Home price growth will be generally higher in Europe, Latin America and Australia, than in North America and Asia, due to declining interest rates and easing inflation boosting demand.
China will continue to see mid-single-digit price declines, says Fitch. The country’s housing policy changes have had limited impact to date, indicating a structural oversupply (several reports have estimated that there are more than 50m empty homes) and weak demand.
France and the US are likely to see price stagnation in 2026, according to the report, with policy uncertainty affecting consumer sentiment and home purchase decisions. Fitch states: ‘France may see declines in 2027, but we expect prices in the US to bottom out in 2026 before picking up again in 2027.
‘Mortgage rates will mostly stabilise or edge lower in 2026 and 2027 as most countries are following a path of policy rate easing. However, inflationary pressures in the US, Mexico, Brazil, Japan and the UK will limit policy rate cuts. Long-term bond yields in the US, UK, Japan, Germany, France and the Netherlands are likely to stay elevated, possibly reflecting market concerns about sovereign debt levels to fund increased government spending. This may keep upward pressure on mortgage rates, particularly in long-term fixed markets.
‘While we expect arrears to remain low, they will rise in the US, Mexico, Canada and Japan with pressures on real income. GDP growth has slowed across these markets, with the US seeing offsetting strength from IT-related investment and equity-wealth effects even as tariffs weigh on trade.’
Fitch forecasts steady but subdued world 2026 GDP growth of 2.4% versus 2.5% in 2025, with the slowdown in China driving the slight deceleration.
In Canada, Fitch forecasts national home price growth of 1-3% in 2026, rising to 3-5% in 2027 as mortgage rates ease and sentiment stabilises. Reduced net immigration, emerging condo oversupply, and cautious buyers and builders are slowing momentum. Despite this, demand still exceeds supply given 2023 population growth of 1.23m, a slow pace of housing starts amid high construction costs and lengthy planning approvals, which are all keeping prices high.
Fitch expects home price growth in the UK to continue in line with disposable income growth at between 2% and 4% for both 2026 and 2027.
Recently announced tax changes that reduce household disposable income in the UK will not take effect immediately and do not materially impact our view on near-term home price growth. However, demand for higher-value properties may weaken due to the council tax surcharge, especially near the £2m threshold.
Housing supply remains insufficient to bring downward pressure on prices. According to ONS data, the number of housing completions fell to 184,590 in 2024 from 194,740 in 2023. Based on the provisional 2023 dwelling stock of around 30.5m, the growth rate of new housing is slightly below that of the overall population.
In Spain, the report expects home prices to grow by 8-10% in 2026 before decelerating to 6-8% in 2027. Housing supply constraints remain pronounced. Bank lending for housing development has decreased sharply to represent just 6% of GDP from 40% in 2008, while the pace of household formation is double that of new housing construction.
Fitch forecasts national home prices in Australia will rise by 3-5% in 2026, with the 2027 range higher at 4-6%. The growth trend is lower than the 8.5% forecast of 2025, with borrower affordability moderating price appreciation. Gains will continue to be supported by constrained supply and resilient demand, however.
Demand is underpinned by strong net overseas migration and a historically low average household size, which increases household formation. Tight rental markets, with low vacancies and rapid rent growth, are also pushing more renters towards ownership. These factors are increasing buyer competition and reinforcing price pressure amid limited supply.
In Brazil, Fitch forecasts that nominal home prices will rise by 5-7% in both 2026 and 2027. The report adds: ‘Brazil’s significant housing deficit supports price growth. Lingering construction cost pressures, including materials and labour costs, and low unemployment also impact prices, with developers’ cost bases remaining elevated. However, we expect high interest rates and elevated household indebtedness to temper demand.’
