Global Housing Market 2026: Where Prices Rise, Where They Don’t

Is the global housing market slowing down in 2026? Broadly, yes — Fitch Ratings’ mid-year 2026 Global Housing and Mortgage Outlook forecasts weaker housing market conditions across most major markets this year, as inflation pushes mortgage rates higher, erodes affordability, and softening labor markets add pressure on borrowers, according to Fitch’s own analysis republished by Hellenic Shipping News. But that headline slowdown masks sharp regional divergence — several markets are still seeing genuinely strong price growth, even as others stagnate or face rising mortgage arrears.

The single biggest disruptor cited across nearly every major 2026 housing forecast is the same one reshaping oil, gold, and central-bank policy this year: the Iran conflict. Fitch specifically notes that Iran-conflict-driven oil prices have raised inflation and mortgage rates, pressuring building costs and new housing supply, and dampening market activity broadly through the remainder of 2026.

Where Home Prices Are Actually Falling Behind

Featured Snippet Target: Fitch Ratings has raised its mortgage-arrears and mortgage-rate forecasts while lowering its home-price forecasts specifically for the UK and Australia in 2026 and 2027, citing rising gilt yields and political risk pushing UK mortgage rates higher, and stretched affordability combined with a higher-for-longer interest rate environment weighing on Australian market activity.

Canada presents a related but distinct concern: Fitch has increased its mortgage arrears forecast for the country specifically because borrower pressure is mounting — personal bankruptcies have reached their highest level since 2009, unemployment has ticked up, home equity has declined alongside lower prices, and a wave of mortgages are resetting at materially higher rates as fixed terms from the ultra-low-rate era expire. Despite that stress, Royal LePage’s own 2026 forecast still projects Canada’s national aggregate home price rising a modest 1% year-over-year to $823,016 by the fourth quarter of 2026, framing the market as being in a “reset” phase following the trade-war and political-leadership-driven uncertainty of 2025, according to Castanet Kamloops.

The U.S. and France are both expected to see outright price stagnation in 2026 in Fitch’s forecast, with policy uncertainty affecting consumer sentiment and home-purchase decisions in both markets — though Fitch notes any U.S. price declines are expected to bottom out within 2026 rather than continuing into 2027, while France may see actual price falls extend into next year, according to Fitch’s annual outlook as reported by the Mortgage Bankers Association’s newslink service.

Where Home Prices Are Still Climbing Fastest

The strongest 2026 home-price gains globally are concentrated in a specific set of markets with structural supply constraints. Fitch expects Spain to lead with 8-10% price growth, driven by robust demand from immigration and non-resident buyers, followed by Mexico at 7-8% and Brazil at 5-7%. Fitch describes supply constraints across these and other markets — including Canada, Germany, and the Netherlands — as “entrenched,” driven by persistently high land, labor, and material costs, with lengthy permitting and regulatory processes compounding the shortage. Policy efforts in Spain and Mexico specifically aimed at boosting new housing supply are likely to only modestly help, according to Fitch, and are unlikely to close existing supply gaps in the near term.

Australia occupies a distinctive middle position: while Fitch has lowered its overall home-price forecast for the country due to affordability pressures, separate industry forecasts remain notably more bullish. Domain’s 2026 forecast projects record prices across every major Australian capital city, with the combined median house value rising 6% to a new high of $1,339,267, and Sydney specifically forecast to see house prices climb 7% to a record median of $1,924,430, according to Money Magazine’s coverage of the report. Domain’s chief of research and economics, Nicola Powell, has attributed this continued strength to sustained high demand meeting buyers “continuing to chase affordability” — particularly in the unit market, where several cities are forecast to outperform house-price growth. Australia’s approvals process remains below the level needed to meet household-formation needs, driven by strong migration and historically low average household sizes, keeping vacancies tight and prices supported even as affordability pressures mount.

The UK’s More Modest, But Still Positive, Outlook

The UK sits between these extremes. While Fitch has turned more cautious on UK housing specifically, individual UK lenders and portals have published more modestly positive 2026 forecasts: Halifax expects prices to rise 1-3% this year in what it calls a “steady rather than spectacular” market, Nationwide forecasts 2-4% growth citing improving affordability, and Savills expects around 2% growth in 2026 with nearly 25% cumulative growth by 2030, according to Morningstar’s compilation of lender forecasts. Rightmove’s early-2026 data showed a 2.8% jump in January asking prices — the largest increase for that month on record — suggesting genuine early-year buyer momentum even as Fitch’s more cautious full-year framing points to headwinds building from rising gilt yields and a softening labor market.

The Common Thread Across Every Market

Reading across all these national forecasts, a consistent pattern emerges: markets with genuine, structural housing shortages (Spain, Mexico, Brazil, Australia) are seeing prices climb despite the same higher-mortgage-rate, inflation-driven headwinds affecting every other market, while markets without acute supply constraints or facing specific domestic stress factors (the UK’s fiscal and political risk, Canada’s borrower distress, the US’s policy uncertainty) are seeing stagnation or increased arrears risk. Interest rates and inflation are a genuinely global headwind in 2026, but local supply-demand fundamentals — not the global rate environment — appear to be what’s actually determining which markets are outperforming.

The Bottom Line

The global housing market in 2026 isn’t experiencing a uniform slowdown or a uniform boom — it’s fracturing along supply-constraint lines. Spain, Mexico, Brazil, and Australia’s supply-starved capital cities are still posting genuinely strong price growth even amid rising global mortgage rates, while the UK, Canada, the US, and France are seeing varying degrees of stagnation or rising borrower stress, driven by a mix of domestic political risk, borrower distress, and policy uncertainty layered on top of the shared global backdrop of Iran-conflict-driven inflation and elevated mortgage rates.

Next step: Anyone evaluating international real estate exposure in 2026 should weight local supply-constraint data more heavily than headline national interest-rate trends — the countries outperforming this year are doing so specifically because structural undersupply is offsetting the same higher-rate pressure that’s weighing on less supply-constrained markets.