What is happening to the global housing market – and what comes next?

The broad global picture is that the massive surge in property prices is coming to an end, writes Hamish McRae

Property in a typical developed economy accounts for a massive proportion of its wealth, and is much larger than its annual GDP (PA)

House prices worldwide are starting to plateau and maybe fall. So what is happening in the different markets? And what is likely to happen next?

Those questions probably affect more people than just about anything else in the world of finance and economics, because property in a typical developed economy accounts for a massive proportion of its wealth, and is much larger than its annual GDP. In the UK the housing stock was worth £8.4 trillion at the end of last year, which compares with GDP last year of £2.2 trillion.

So what is happening? The broad global picture is that the massive surge in property prices is coming to an end. In some of the markets where it has risen fastest, prices may have started to fall. For example in the US high-tech centres such as San Jose in California, there are reports that the market has shifted in favour of buyers. The number of sales is clearly going down – particularly for luxury homes – and that usually translates into lower prices.