The global housing market is entering one of its most turbulent periods in over a decade, with new data showing significant price declines across 18 major international cities. What started as a gradual cooling in 2023 has now escalated into a full-scale downturn driven by high interest rates, weakened buyer demand, and mounting economic uncertainty.

This shift marks a dramatic reversal after years of unstoppable growth and experts warn the trend is far from over.

A Worldwide Slide: Cities Hit Hardest

According to multiple housing market trackers, the steepest price drops are being recorded in:

• Toronto & Vancouver – sharp declines as affordability reaches breaking point
• London – sellers slashing prices to move stagnant listings
• Sydney & Melbourne – demand softens despite population growth
• Berlin – first negative annual trend in over a decade
• New York & San Francisco – luxury market softens under high rates
• Hong Kong – prolonged downturn accelerates

Emerging markets are also under pressure, with Dubai, São Paulo, and Istanbul showing early signs of cooling after years of rapid expansion.

Why Prices Are Falling Now

Several powerful forces are converging:

1. High Interest Rates Are Crushing Demand

Mortgage rates in many countries have doubled or tripled since 2021. Even financially stable households are stepping away from the market.

2. Cost of Living Crisis

Inflation has reduced purchasing power worldwide. Buyers cannot absorb both high living costs and high borrowing costs.

3. Overvalued Markets Correcting

Cities with years of overheated growth are now rebalancing as prices reach levels most buyers cannot afford.

4. Global Uncertainty

Slowdown in China, geopolitical tensions, and fears of recession are causing cautious behaviour in the market.

Renters Face a Different Kind of Crisis

While home prices are falling, renting remains difficult across many cities. Limited housing supply and strong demand continue to push rents upward even as ownership becomes less attractive.

This unusual divergence falling purchase prices but rising rents creates a complex environment for policymakers.

Are THESE Cities Next to Cool?

Analysts warn that the next wave may hit:

• Miami
• Paris
• Tokyo
• Dubai (early signs already visible)

Rapid price growth over the last two years makes these markets particularly vulnerable if central banks delay rate cuts.

Investors Shift Strategies

Investors worldwide are pivoting in response to the downturn:

• Moving from short-term flips to long-term rentals
• Prioritising cash-flow-positive assets
• Increasing interest in secondary cities with lower entry prices
• Investing in markets where remote work has boosted long-term demand

Some large private equity firms are even buying portfolios at discounted rates, betting on a rebound in 2026–2027.

What Buyers Should Know

For ordinary buyers, the current downturn offers both risk and opportunity:

• Prices may continue falling into 2025
• Mortgage rates could remain high longer than expected
• Some markets will see deeper corrections than others
• Cash buyers currently have the strongest negotiating power

Financial advisors warn against “catching the falling knife” but also note that buyers who can afford long-term ownership may find good deals in the next 12–18 months.

What Sellers Should Expect

Sellers must adjust expectations:

• Longer time on market
• More negotiations
• Lower offers
• Staging and pricing strategy now matter more than ever

Those who do not urgently need to sell are choosing to delay listings until conditions improve.

GLOBAL OUTLOOK

Economists expect the housing downturn to continue unless:

• Central banks begin lowering rates
• Supply shortages ease
• Inflation stabilizes
• Consumer confidence rebounds

Until then, the global housing market remains in its most fragile state since the 2008 financial crisis.