Monetary policy rates have risen, on average, by 4 percentage points in the major economies, to levels prior to the global financial crisis.

For example, in the United States, the Federal Reserve has raised its target rate to the 4.5 to 4.75% range from virtually zero a year ago, the fastest pace of rate increases in two decades.

In turn, this has led to a sharp increase in average 30-year fixed mortgage rates, which rose to 7.1% at the end of last year, an all-time high not seen in two decades.

Interest rates have a critical influence on home prices, along with income and population growth, on the demand side, and various supply factors, such as regulations and construction costs.

As a rule of thumb, according to multinational data, every 1 percentage point increase in real interest rates slows the pace of house price growth by about 2 percentage points.

Each percentage point increase in mortgage rates increases the monthly interest payment of the average U.S. homebuyer by $100, and the effects may be worse for buyers in countries where variable-rate mortgages predominate.

The duration of the rise in house prices will depend on whether rate increases by central banks have already succeeded in containing inflationary pressures. The latest update of the IMF's World Economic Outlook forecasts that inflation this year will be lower than it was in 2022 in about 85% of countries.

Global inflation is forecast to slow from nearly 9% last year to about 6.5% this year, and to slow further next year, due to the impact that rate hikes have already had on easing bottlenecks in supply chains.

Thus, if central banks slow or halt rate increases, house prices should show greater stability.

Translated by: A.M