Global house prices rise, but affordability continues to bite

House price growth across global markets accelerated in the third quarter of 2025. The weighted average annual price increase among our basket of 55 housing markets rose to 2.4%, up from 2.2% in Q2.

That's the strongest rate of growth since Q1 2024, and signals a steady, albeit modest improvement. Monetary policy is providing a tailwind: through Q3 2025, central banks delivered zero rate hikes and 27 net cuts (6 in July, 9 in August, 12 in September), extending the easing phase that began earlier in the year. This broadening shift in policy is helping to lower borrowing costs and support demand across an increasing share of markets.

Purchasing power

Turkey once again tops our index with nominal annual growth of 32.2%, although high inflation leaves real growth at  0.8%. North Macedonia (25.1%) and Portugal (17.7%) complete the top three, while a European cohort dominates the upper rankings: eight markets recorded nominal gains above 10%, seven of which are in Europe (North Macedonia, Portugal, Bulgaria, Hungary, Croatia, Spain and Slovakia). At the other end of the table, Finland registered the largest annual decline at  9.5%, with Mainland China ( 5.5%) and Canada ( 2.6%) also seeing notable falls.

Hong Kong SAR edged down by  0.8% year on year. Overall, 86.3% of tracked markets posted positive annual growth in Q3, an increase from earlier in the year and consistent with the gradual improvement in headline momentum.

Despite firmer nominal outcomes, global real house price growth remains slightly negative at  0.1% year on year in Q3 2025. In several markets, inflation continues to erode purchasing power, leaving affordability stretched even as policy rates trend lower. With more widespread easing underway, a sustained improvement in real growth will likely require both further policy support and a clear downshift in price pressures.

Erratic policymaking

The Federal Reserve voted to hold rates steady on Wednesday in the face of strong economic growth and elevated inflation, though the influence of these votes on the housing market has ebbed a little in the face of erratic policymaking in the White House.
Fixed mortgage rates track the 10-year Treasury yield much more closely than the fed funds rate. Historically, 30-year mortgage rates sit a percentage point or two above the 10-year yield, though the spread has widened since the pandemic. Threats to the Fed's independence is one of the factors pushing Treasury yields higher, as we saw overnight following reports that President Donald Trump is planning to nominate Kevin Warsh to be the next Fed chair. Warsh has served as an advisor to Trump on economic policy and has argued for lower interest rates in recent months.

Fixed rate mortgages sit at lowest levels in three years, but 30-year rates at 6.1% are plenty high enough to keep price growth in check. The S&P Cotality Case-Shiller U.S. National Home Price NSA Index posted a 1.4% annual gain for November, in line with the previous month and less than half the rate of growth posted a year earlier. On a non-seasonally adjusted basis, 15 of the 20 major metro areas saw prices decline from October (versus 16 declines in the previous month). Only a handful of markets – including Los Angeles, San Diego, Miami, New York, and Phoenix – eked out slight gains.

Rising Treasury yields would usually strengthen the dollar, but again, US policymaking is testing that link. Sterling rose to a five-year high against the dollar yesterday, both due to the brightening UK outlook and a sell-off of US assets following the Greenland saga. The dollar would usually be the world's primary haven asset during volatile periods, but investors have been piling into gold instead. The pound has climbed 10% against the dollar in the past year.

Alternative business models

The FT has an interesting interview this morning with Matthew Pennycook, who plans to announce a housing strategy in the coming weeks that "will encourage alternative business models to those used by large developers, as well as a bigger role for the state."

The government is meeting the reality that, while its planning reforms have so far been encouraging, housing supply rises with demand. Steve Turner, executive director of the Home Builders Federation points out that a lack of affordable mortgage lending or a government support scheme for buyers is preventing the industry from stepping up delivery.

Aspects are encouraging – “We need that diversification — more SMEs back in the game, producing homes at scale, councils building again at scale, build-to-rent operators and the state doing its part on larger sites in particular.” This mirrors advice given by government reviews going as far back as Oliver Letwin's in 2018.

Elsewhere in housebuilding; in a trading update, Crest Nicholson flagged a post-Budget recovery in activity in a trading update. The Telegraph covers Molior data showing the Mayor of London has been counting early-stage developments – such as buildings slated for demolition as well as blueprints for new homes – towards his total of affordable homes under construction.

Instead of 45,000 affordable homes claimed by the Greater London Authority (GLA) as being in progress, Molior said only 22,468 are actually being built in the capital.

In other news...

Is the UK on the cusp of a productivity revival? (FT).