Real estate prices fall as central banks change the tone

In fact real estate protects from inflation only until Feds keep rates low

In Toronto, Canada’s largest city, house prices have fallen 14 percent since February. In the US, Australia and New Zealand, the decline has also been significant.

The first signs are already there: houses are on sale longer, the supply is increasing. Prices are still rising, but in other countries they are already falling. New Zealand in particular, which also had to contend with ridiculously high house prices for years, especially in Auckland, could be an important gauge. Prices fell by 2.3 percent in the last quarter, the biggest decline in 13 years. Housing prices in Australia are also falling for the second month in a row, and in the US, too, the stretch seems to be coming out.

An old economic rule applies again now: interest rates are rising, house prices are falling. The central banks in Canada, the US, Australia and New Zealand have already intervened earlier and harder than the ECB in Europe. But it has now begun. The question is where it ends: inflation should be curbed, but interest rates should not rise too high.

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