In the US, a combination low inventory, high prices, and mortgage rates that are the highest in a decade has sent the sale of previously owned homes down to its lowest level since 2010.

Intercontinental Exchange revealed that the current market is the least affordable since the 1940s, with an average home costing about 40% of median household income.

The most severe consequences may be yet to come. Goldman Sachs economists wrote in a last-month report that the impacts of high mortgage rates will be most evident by 2024. According to them, transactions will drop to the lowest since the early 1990s.

The knock-on impact is significant. It could limit mobility, forcing family and friends to live together more frequently, and preventing homes from being sold by younger families as the elderly age.

Homeowners have near-record equity, and the majority will not be impacted by any rate hikes. These increases could otherwise force home sales or lead to foreclosures. This would allow buyers an opportunity in the market.

The real estate bonanza, which has fueled the wealth of millions of people worldwide, is over.

Worldwide, the markets are being caught between high borrowing costs coupled with a scarcity of homes that has kept prices at an all-time high. It has made housing even more affordable in some regions. Property owners with resetting home loans are also facing increased financial stress.

A lot is unknown. A war that is intensifying in the Middle East as well as China’s own economic difficulties – which are centred around its highly-indebted developers — could both contribute to a global slowdown.

This, in turn, would decrease housing demand while pushing down prices and causing financial chaos. The economy is more concerned about commercial real estate.

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Even though the inflation rate has dropped and many countries have slowed their rate hike campaigns, consumers seem to be beginning to believe that borrowing rates may never drop as low as the ones in the fifteen years following the Financial Crisis.

The US housing market, dominated mostly by 30-year-mortgages, is effectively frozen. This is because homeowners with low mortgage rates are reluctant and buyers are squeezed.

New Zealand, Canada and other boom regions have seen their values remain stable, but those who paid the highest prices for houses are now facing higher payments on their mortgages.

Tenants are increasingly in distress, from South Korea to the UK. In many cases, rising interest rates only make it harder to build.

Hong Kong, on the other hand, has been affected by China’s slowdown, an exodus in population and rising rates which have halted price increases that were once unstoppable. Because its currency pegged to greenbacks, the city’s financial policy follows along with US.

It has resulted in mortgage rates that have doubled since 2022. The price of homes in the notoriously costly area has fallen to its lowest point in six years. Builders have offered deep discounts while the government is reducing extra stamp duty to some buyers.

Hong Kong’s housing industry will continue to struggle unless rates fall. Hong Kong housing prices are so high that they have become unaffordable for many.

It may look different in every country, but the fact that people are paying more for housing, whether renting or purchasing, is a drag on economies worldwide.

As buyers become increasingly excluded, the viability and security of homeownership – which has been the foundation of generations of personal financial planning – becomes more problematic.

The owners with long tenures and who do not need a mortgage or have equity in their home from rising prices are the real winners.

When interest rates suddenly spiked and people found themselves with higher payments, they thought that they would be able to make it work or could take out mortgages expecting to refinance them later. It’s quite another when costs keep rising for years.