Global Real Estate at a Crossroads: Housing Slowdowns Deepen Across the U.S., UK, China and Europe

Global real estate is undergoing a major reset as high borrowing costs, affordability pressures and economic uncertainty reshape property markets. U.S. existing-home sales have fallen to a 16-year low, while the UK housing outlook continues to weaken. China’s prolonged property downturn remains a major economic challenge, particularly in lower-tier cities. Meanwhile, Europe’s commercial real estate recovery remains uneven as investors become increasingly selective, favouring high-quality assets amid elevated financing costs and geopolitical uncertainty.

The global real estate market is entering another difficult phase. From a dramatic slowdown in U.S. home sales and deteriorating sentiment in the United Kingdom to China's prolonged property crisis and a hesitant recovery in European commercial real estate, higher borrowing costs are reshaping property markets across major economies.

The circumstances differ considerably from country to country, but they share a common pressure point: the cost of money. Higher mortgage rates are making homes less affordable, expensive financing is discouraging investors, and economic uncertainty is making both households and institutions more cautious.

Together, developments across the United States, United Kingdom, China and Europe reveal a global property market increasingly divided between buyers waiting for affordability to improve, sellers reluctant to cut prices and investors becoming far more selective.

U.S. Home Sales Fall to Their Lowest Level in More Than 16 Years

The clearest warning signal has emerged from the United States.

Existing-home sales plunged 5.5% in October 2026 to a seasonally adjusted annual rate of 3.75 million homes, according to the National Association of Realtors. That was the lowest sales rate since August 2010 and represented an 8.8% decline compared with a year earlier.

The primary obstacle is affordability.

The average 30-year fixed mortgage rate climbed above 7% in late August and reached 7.40% by mid-September. Although it subsequently eased somewhat, it still averaged 7.18% in early November.

For households borrowing hundreds of thousands of dollars, the difference between mortgage rates of 3% or 4% and rates above 7% dramatically changes monthly repayments.

Yet weakening demand has not produced a major collapse in prices.

The median existing-home price increased 0.4% year-on-year to $421,900 in October, the highest ever recorded for that month. Inventory, meanwhile, increased to 1.59 million homes, representing 5.1 months of supply, the highest level since November 2015.

That combination is creating an unusual market: transactions are collapsing faster than prices.

First-time buyers are being hit particularly hard. They represented only 29% of existing-home purchases in October, compared with 32% a year earlier. At the same time, cash buyers accounted for 29% of transactions, while investors and second-home purchasers represented 20%.

The numbers suggest that buyers who depend heavily on mortgage financing are at an increasing disadvantage.

UK Property Market Faces Renewed Pressure

Across the Atlantic, Britain's housing market is confronting similar affordability problems.

The Royal Institution of Chartered Surveyors (RICS) reported that its new-buyer-enquiries indicator stood at -24% in October, signalling continued weakness in demand. Its measure of agreed sales also dropped to -24%, from -18% previously.

More concerning is what property professionals expect next.

RICS' 12-month sales expectations balance fell to -17%, its most pessimistic reading since July 2023. The organisation said renewed increases in mortgage rates were weighing on demand, while geopolitical and energy-market developments were hurting confidence.

Interest rates have once again become central to the outlook.

The Bank of England raised its benchmark interest rate to 4% from 3.75% in November, its first increase in three years. That has added pressure to mortgage borrowing at a time when many households are already struggling with elevated living costs.

There is also another consequence emerging in Britain's rental market.

While homebuyer demand remains subdued, tenant demand has strengthened while landlords have reduced the number of properties coming onto the market. RICS' expectations for rent growth over the following three months climbed to +41, up sharply from +29 and the strongest reading since early 2024.

This creates a difficult cycle: households unable or unwilling to purchase remain renters for longer, potentially adding further pressure to rental prices.

China's Property Crisis Remains a Major Economic Challenge

China presents a different and potentially more structural problem.

Its property downturn has lasted for years and continues despite repeated government efforts to stabilise the market.

In September, new-home prices fell 0.1% month-on-month and 2.8% year-on-year, extending a period of more than three years without a monthly or annual increase nationally. Property investment and home sales also contracted more rapidly during the first nine months of 2026.

The situation is especially difficult outside China's largest metropolitan areas.

Data from the China Real Estate Index System showed that in third- and fourth-tier cities, new-home prices were approximately 2% lower year-on-year in October, while existing-home prices had fallen around 6.5%.

Beijing has introduced multiple measures to encourage purchases. Authorities have relaxed some restrictions, provided subsidies and introduced policies designed to reduce mortgage costs for eligible buyers.

There have been signs of stabilisation in major cities, but the recovery has not spread evenly across the country.

That matters far beyond property developers.

Housing has traditionally represented a major store of household wealth in China. Falling property values can therefore make consumers feel poorer, encouraging them to save rather than spend. The downturn also hurts local governments that historically depended heavily on revenues connected with land and property development.

Consequently, China's property crisis has evolved into something much larger than a real estate problem. It is increasingly intertwined with consumer confidence, domestic demand, local-government finances and China's broader economic growth.

Europe's Commercial Property Recovery Remains Fragile

Europe's commercial real estate market offers a slightly different picture.

Rather than an outright collapse, the region is experiencing an uneven and highly selective recovery.

MetLife Investment Management expects European commercial real estate transaction volumes to decline around 5% in 2026 before rebounding approximately 20% in 2027. It nevertheless projects commercial property values to rise around 2.1% in 2026 and 4.2% in 2027, indicating that analysts still see the potential for a recovery once financial conditions become more supportive.

For now, investors remain cautious.

Higher financing costs, geopolitical uncertainty, trade tensions and elevated energy and transport costs have complicated decisions about property valuations and future rental growth.

But capital has not disappeared.

Large transactions are still taking place in premium assets. Among them, a portfolio of 12 UK private hospitals changed hands for approximately €1.5 billion, while a major Paris office property, Capital 8, was acquired for a reported €820 million, demonstrating continued investor appetite for high-quality assets.

This points toward an increasingly important distinction in global real estate: investors are not abandoning property altogether; they are becoming much more selective about where they deploy capital.

A Global Property Market Being Reset

Across these four markets, a common story is emerging.

In the United States and United Kingdom, expensive mortgages are reducing affordability and suppressing transactions. In China, years of declining prices and weak confidence continue to undermine the property sector despite substantial policy intervention. Across European commercial real estate, institutional capital remains available, but investors are demanding stronger fundamentals and better risk-adjusted returns.

The era of exceptionally cheap borrowing that powered property markets for years has clearly faded.

What comes next will depend heavily on interest rates, inflation, economic growth and consumer confidence. If borrowing costs decline, pent-up housing demand could gradually return and commercial-property investment could accelerate.

But if financing remains expensive, the adjustment could continue well into 2027.

For buyers, developers and investors alike, the defining feature of today's global property market is therefore no longer relentless appreciation. It is affordability, selectivity and adaptation.

And that may represent the most important shift of all: global real estate is moving from an era driven by cheap capital to one in which every property investment must once again justify its cost.

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