Jan 21 (The following statement was released by the rating agency)
Fitch Ratings says in its latest annual Global Housing and Mortgage Outlook report that
while relatively high house price to income ratios in major global cities (such as London, New
York, San Francisco and Tokyo) versus national averages can partly be justified by
different housing supply and demand factors, we expect house price affordability
in some cities to be stretched further over 2014 given near term expected house
Historically, house price growth has been more pronounced in metropolitan areas
around the world while growth elsewhere is more closely linked to income growth
and inflation. It is commonly believed that larger cities will continue to
attract above-average GDP, income, population and house price growth.
a€œWhile we share this view at Fitch, we do not believe cities are immune from
cyclical house price movements and their consequences. Longer-term average
annual house price growth cannot excessively disconnect from incomes,a€� says
Andre Dahlkamp, Senior Director in Fitcha€™s EMEA RMBS group.
More generally, Fitch expects 2014 house prices to increase in Germany and the
UK due to low interest rates, sound GDP growth and improved credit availability.
House prices are likely to increase modestly in 2014 in the US and Australia and
remain flat in Canada. We expect further house price declines in the Netherlands
and Italy, and to a larger extent in Greece and Spain. Eurozone economic
stabilisation should lead to steady prices in 2015 in the Netherlands and Italy,
while Greece and Spain are likely to see prices bottom out in that year.
a€œFor all seventeen countries we evaluated, the mortgage and housing market
outlook has either improved or remained broadly the same compared with twelve
months ago,a€� says Gregg Kohansky, Managing Director in Fitcha€™s EMEA RMBS team.
a€œThis is partly in step with the economic recovery for a number of countries but
also as a result of government and central bank policy changes which are
boosting supply and demand for residential mortgages and housing. The outlook
has improved most notably for markets in Ireland, Portugal and the UK,a€� Mr.
Given the economic recovery and supporting policies, the next two years are
likely to see growth in new gross mortgage lending in most countries. The
eurozone periphery will recover from a low base. We forecast cautious growth in
the Netherlands, Germany, Australia and South Africa, as well as strong 2014
growth in the UK and Brazil. In contrast, 2014 mortgage lending volumes in
Canada may fall slightly due to government measures to moderate the housing
market. Lending volumes are likely to decline in the US as mortgage rates rise
and refinancing activity declines. In France, volumes should fall due to lower
housing market and refinancing activity.
Fitch expects mortgage arrears in Spain and the Netherlands to continue to rise
in 2014/15. The speed of the increase is slowing in Ireland and Greece, where
non-performing loan volumes should drop in 2015/16. While serious delinquencies
in US RMBS legacy portfolios are still high, they should continue to gradually
decrease. Mortgage performance for US post-crisis originations will remain very
strong due to more prudent mortgage underwriting standards. In most other
countries, arrears and defaults should stay stable or improve slightly.
Fitcha€™s "Global Housing and Mortgage Outlook" report includes forecasts
Link to Fitch Ratings' Report: Global Housing and Mortgage Outlook