Which housing markets are most exposed to the coming interest-rate storm?

STOCKS ARE sinking, a cost-of-living crisis is in full swing and the spectre of global recession looms. But you wouldn’t know it by looking at the rich world’s housing markets, many of which continue to break records. Homes in America and Britain are selling faster than ever. House prices in Canada have soared by 26% since the start of the pandemic. The average property in New Zealand could set you back more than NZ$1m ($640,000), an increase of nearly 46% since 2019.

For more than a decade homeowners benefited from ultra-low interest rates. Now, however, changes are brewing. On May 5th the Bank of England, having forecast that inflation in Britain could exceed 10% later this year, raised its policy rate for the fourth time, to 1%. The day before America’s Federal Reserve had increased its benchmark rate by half a percentage point, and hinted that more tightening would follow. Investors expect the federal funds rate to rise above 3% by early 2023, more than triple its current level. Most other central banks in the rich world, ranging from Canada to Australia, have either started pressing the monetary brakes, or are preparing to do so.