According to a report in the Nihon Keizai Shimbun on 20 November, global housing prices are shifting from soaring to falling. House prices in countries such as Sweden have fallen by about 10% from their peak, and prices in developed economies such as the US, UK and Germany have also started to fall since this summer. Interest rate hikes to curb inflation appear to be having an "effect", but a sharp contraction in the $250 trillion global housing market would have a significant impact on household debt and financial institutions. There are already signs of financial system turmoil in Eastern Europe and elsewhere.

　　The Bank of Canada raised its benchmark interest rate to 3.75%, turning the once buoyant country's housing market on its head. The Trinity Canada-National Bank composite house price index showed that national house prices fell 3.1 per cent in September from a year earlier, the biggest one-month drop since traceable data became available in 1999. Homes are not selling, homeowners are unable to work their money around, and funds and banks that provide financing are losing more and more money.

　　In 2020, a number of central banks cut interest rates simultaneously in response to the new crown epidemic. The number of people buying homes around the world to take advantage of the low interest rate cycle is growing.

　　But aggressive interest rate increases implemented to curb inflation have led to changes in the market. In New Zealand, house prices fell 11% in October from their peak in January this year. In Sweden, house prices also fell back 11 per cent in September from their peak back in March.

　　House prices fell particularly sharply in countries that were the first to raise interest rates and in countries with overheated markets. House prices in major economies such as the US, UK and Germany turned down from the summer.

　　According to UBS, home loan rates in 25 major cities around the world doubled in mid-2022 compared to a year earlier and "a significant correction in house prices can be expected going forward". In the US, 30-year mortgage rates rose to 7%, a record high after 21 years, while the number of mortgage applications fell to the lowest level since 1997.

　　The residential market is huge. According to Savills, the UK's leading real estate broker, the global residential market will reach US$250 trillion in 2020, 2.5 times the market value of the global stock market. If the residential market shrinks, then both household spending and the banking sector will suffer widespread negative effects.

　　The impact of the Korean real estate market on household spending is troubling. Korean households have debts amounting to 200% of disposable income and, with over 80% of mortgages at variable rates, rising interest rates have hit many households hard.

　　Changes in the housing market have even led directly to bank failures in Eastern Europe, where in September, Poland's Gaitin-Noble Bank was forced to accept a public bailout. Housing loans in the country have been problematic since the financial crisis. Low-interest mortgages denominated in Swiss francs were once prevalent, but as the Polish currency, the zloty, depreciated against the Swiss franc, more and more Poles were unable to repay their mortgages. This year the country has been hit by a combination of a devaluation of the currency and falling house prices, threatening the banks' operations.

　　Oxford Economics calculates that global GDP growth could plummet from the standard 1.3 per cent line to 0.3 per cent when the triple negative factors of falling house prices leading to a reverse equity effect, falling investment and tighter credit standards combine.