House prices are expected to climb globally over the next two years, with construction unable to keep pace with surging demand in most countries, according to Fitch Ratings’ 2025 housing and mortgage outlook.

The report forecasts nominal home price growth in the low to mid-single digits for many countries, driven by factors such as low unemployment, real wage growth, and declining inflation, which have bolstered household disposable incomes.

Regional Highlights

• Europe:
  • In the eurozone, rising real household income is fueling demand and driving up prices. Exceptions include France, where prices are projected to decline due to strained affordability and political uncertainties, though a recovery may begin in 2026.
  • The Netherlands is expected to see rapid price growth, albeit slower than the current year’s 13%, with rates between 8% and 10% in 2025. Limited supply, coupled with government programs supporting first-time buyers, will sustain high demand despite tighter fiscal policies.
  • Germany and Spain are forecasted to experience accelerated price increases. Spain could see costs rise by 4% to 6% in 2025, driven by falling interest rates and robust consumer confidence, while Germany’s growth is expected to range from 2% to 4%.
  • The UK anticipates modest growth of 2% to 4%, supported by lower mortgage rates and a strong labor market. Italy, however, may see smaller increases of 0.5% to 2.5% due to high mortgage rates and a focus on older properties rather than new builds.
• North America and Latin America:
  • In Canada, price growth will benefit from government programs for first-time buyers, while Brazil and Mexico will see increases driven by rising wages and construction costs.
• Asia-Pacific:
  • China stands out as one of the few countries where prices remain subdued, reflecting its unique economic conditions and housing market challenges.

Challenges to Supply and Demand
Fitch highlights several factors limiting housing supply, including high land, labor, and material costs, as well as regulatory constraints. Smaller builders face difficulties accessing financing due to elevated borrowing rates.

Demand, meanwhile, continues to grow, fueled by declining mortgage rates, stable unemployment, and increased household formation. Energy-efficient homes are in particularly high demand, driven by sustainability concerns and rising energy costs.

Risks and Uncertainties
Climate risks, such as flooding, could impact housing prices, especially in vulnerable areas. Additionally, potential shifts in central bank policies or unexpected economic downturns could alter price trends.

Fitch notes that lower-than-expected mortgage rates or stronger economic performance could accelerate price growth, while higher unemployment or renewed inflation could dampen demand and affordability.

With the housing market facing a mix of opportunities and challenges, the global outlook remains cautiously optimistic for 2025 and beyond.

A recent study by BestBrokers.com has revealed that Denmark offers the shortest time to save for a home in Europe, with the average property requiring the equivalent of 114 net monthly salaries to purchase. The report, which assessed property affordability across 62 countries, considered factors such as average income, property prices, inflation, and real mortgage interest rates (adjusted for inflation).

Denmark Leads for Affordability

According to the findings, a 100-square-meter property in Denmark is the most affordable in Europe relative to wages, despite the country being one of the EU’s most expensive in terms of goods and services. Eurostat data from 2023 indicated that prices for goods and services in Denmark were 43% above the EU average. However, high average earnings — the seventh-highest in Europe — offset the cost of housing, making homeownership more attainable.

Ireland and Sweden followed Denmark as the second and third most affordable European countries, requiring 123 and 129 net monthly salaries, respectively, to purchase a 100-square-meter property. This translates to roughly 10 years of annual earnings.

Challenges in Eastern Europe

At the other end of the spectrum, Slovakia and the Czech Republic were identified as the least affordable countries in Europe for homebuyers. In Slovakia, the average home costs 297 monthly salaries, equating to nearly 25 years of wages. For individuals saving half of their income, it would still take 50 years of disciplined saving to afford a family home.

Global Affordability Rankings

The report extended its analysis beyond Europe, naming South Africa as the world’s most affordable country to buy property relative to wages. In South Africa, a 100-square-meter home costs 71 monthly salaries, or just under six years of earnings. The United States ranked second, requiring 76 average monthly salaries to purchase a home, though property prices vary significantly across states.

Nepal and Turkey ranked as the least affordable countries globally. In Nepal, 684 monthly salaries are needed to buy a home, while in Turkey, the figure is 631, equivalent to over 52 years of income.

A Theoretical Assessment

BestBrokers.com clarified that their analysis provides a theoretical perspective, excluding living costs such as food, rent, childcare, and other expenses. It offers a snapshot of property affordability, but real-world factors could significantly impact the timeline for homeownership.

Caution Advised

The report serves as a guide but cautions readers to consider their circumstances before making financial decisions. Housing affordability is influenced by local economic conditions, and saving strategies will differ widely across regions.

This analysis highlights disparities in property affordability and underscores the significant challenges faced by aspiring homeowners in many parts of the world.