Global house prices are expected to rise in the next two years, according to Fitch Ratings.
"Nominal home prices will grow in the low to mid-single digits for most countries in each of the next two years," read their housing and mortgage outlook for 2025.
Prices are increasing due to housing supply failing to keep up with demand in most countries in Fitch's report. Demand has been boosted by low unemployment, real wage growth and lower inflation leaving buyers with more disposable income.
The strongest home price growth is expected in the Netherlands, Canada, Brazil and Mexico in 2025, driven by government programmes in Canada and the Netherlands to support first-time buyers and increasing wages as well as construction costs will be the engine of growth in Brazil and Mexico.
The only exception is France, where prices are expected to decline due to strained affordability and political uncertainty which cannot be offset by the price-boosting effect of the limited supply and lower rates in the country. However, the pace of decline is expected to be slower than last year and prices will potentially start increasing in 2026, read the report.
In the Netherlands, price increase is expected to slow from the current year's 13% to between 8% and 10% in 2025 and between 6% and 8% in 2026. This is still one of the fastest levels of growth globally, mainly driven by insufficient houses available, supply is limited due to increased material and labour costs.
On the other hand, the population is growing and households are becoming smaller, which is increasing demand. The government's programmes to support first-time buyers could further boost demand but tighter fiscal policy is expected to limit purchasing power growth in the country.
Elsewhere in Europe, price growth is expected to accelerate in Germany and Spain while it remains stable in Denmark.
In Spain, houses are expected to cost between 4% and 6% more in 2025 than in 2024 and prices are expected to rise further by between 5% and 7% in 2026. Demand is fuelled by growing consumer confidence resulting from falling interest rates as well as lower inflation. Meanwhile, there are still not enough new houses being built, with new houses covering only half of new household formation, according to the report.
In Germany, home price growth is expected to be between 2% and 4% for both 2025 and 2026, an increase from the 1.5% Fitch estimates for 2024. On the one hand, moderate wage growth is expected to limit affordability while, on the other hand, continued increases in rents make purchasing more attractive, supporting demand, according to the report.
In the UK, Fitch also expects a modest home price growth of between 2% and 4% in 2025 and 2026, driven by lower mortgage interest rates, as lenders have already priced in policy rates reaching 3.5% in 2025m and supported by a strong labour market and rising nominal earnings.
In Denmark, lower interest rates and moderate growth in disposable income will push prices higher by 2%-4% in 2025 and 2026, according to Fitch.
Italian house prices are expected to increase by between 0.5% and 2.5% for 2025 and 2026, due to cooling demand, mostly due to high mortgage rates.
"We expect mortgage rates to decrease to 2.5% in the next two years, but to remain substantially higher than pre-2022 levels," said Fitch in their report. Meanwhile, supply is limited by the number of building permits being reduced, so most transitions involve dated properties, which results in smaller growth than new houses.
Supply is expected to remain low compared to demand across the countries in the report due to high land, labour and material costs coupled with elevated borrowing rates for smaller homebuilders, and regulatory constraints. Demand, meanwhile, is further bolstered by declining rates, low and stable unemployment, growth in household disposable income, and new household formation.
