The house price outlook for the eurozone, says ratings agency Fitch, is continued crash on the periphery and continued correction in most core countries
That means price falls of 15-20% in the worst hit countries – Ireland, Spain and Greece – and falls of around 13% in Italy and Portugal.
The correction will be midler elsehwere – no more than 10% in the UK, France, Belgium, and the Netherlands.
On the global front, Fitch‘s most favourable house price outlooks are for Germany, Australia and the US. For Germany, the outlook is positive for the short-to- medium term after almost two decades of stagnation.
For the US, where house prices are stabilising after five years of sharp falls, Fitch assumes a minor further correction towards a sustainable house price level over the next few years, although with significant regional differences. Australian home prices are expected to remain stable.
In its discussion of the UK housing market, the report notes that the need for more than 200,000 additional houses annually over the next two decades, far exceeding build rates, will support prices:
Undersupply is concentrated in the South East. This imbalance has meant that while headline house prices have remained broadly stable since the latter part of 2009, the London and South East regions are approaching pre-crisis highs, while the rest of the UK market remains around 12% off the peaks experienced in 2007.
Fitch expects regional imbalances to continue to exacerbate historic regional house price disparities. Overall house prices are likely to move sideways or slightly downwards in 2013, masking a continued regional divergence. The agency’s cautious base case scenario foresees house prices dropping by 10% over the medium term.