A combination of high valuations and rising mortgage costs threatens to drag house prices down in several advanced economies, ending a two-year surge in price growth on the back of record-low interest rates.

After easing the burden on homeowners at the start of the pandemic, central bankers are now tightening monetary policy at a fast pace to cope with high inflation while a global recession is looking increasingly likely — exposing markets to a potential crash. Though experts think that global growth in house prices is only likely to slow, they warn that some specific countries will suffer outright falls as their central banks make big rate rises.

In New Zealand prices have already fallen and some indicators, such as mortgage approvals and applications, show that activity in the US is starting to stutter.