Real estate markets in advanced economies face pressures due to monetary tightening, affordability issues: QNB

Real estate markets in advanced economies face pressures due to monetary tightening, affordability issues: QNB

Qatar - Real estate markets in advanced economies face pressures due to monetary tightening and affordability issues, QNB said in an economic commentary.

These factors collectively create a challenging outlook for the sector over the next several quarters, QNB noted.

Real estate plays a crucial role in the advanced economies, as it is deeply intertwined with the business cycle, and contributes significantly to the wealth accumulation of households, corporations, and governments, it said.

The complexities of the labour-intensive supply chain involved in constructing, financing, and distributing real estate affect a variety of sectors, including the job market, transportation, and financial services.

Notably, real estate or property is the largest asset class in the world and serves as the primary source of wealth for households. Real estate has historically demonstrated resilience as an asset, providing long-term wealth preservation.

In fact, over the past two generations, real estate prices have generated positive inflation-adjusted returns across all G7 economies.

However, with the exception of Italy, which was impacted by the euro crisis, and the UK, affected by Brexit, major economies have experienced a significant surge in real property prices since the Global Financial Crisis (GFC).

This trend accelerated further after the Covid-19 pandemic, driven primarily by low and falling interest