Housing Market Hits Two-Year Low as Mortgage Rates and Energy Bills Bite Buyers

Global house price growth has slowed to its weakest pace since early 2024, with some markets like the UK seeing annual growth tumble to a mere 0.5% in October 2026. This sharp slowdown comes as potential homebuyers grapple with significantly higher mortgage rates and rising energy bills, making homeownership a tougher dream to achieve. While the overall cost of goods has increased, the actual value of homes, when adjusted for inflation, has even seen a slight drop globally. The main reasons for this chill in the housing market are clear: central banks aggressively raising interest rates to fight inflation, pushing mortgage rates north of 7% in the US and fixed rates reaching 6% in the UK. This creates a 'lock-in effect,' where existing homeowners with lower rates are hesitant to sell, further limiting available homes. On top of that, despite a temporary dip in petrol prices, overall energy costs, especially for electricity, continue to climb, adding another burden to household budgets already strained by inflation. Looking ahead, the squeeze on homebuyers is likely to continue. With the US Federal Reserve hinting at possible further interest rate hikes and the Bank of England expected to follow suit, mortgage rates could remain elevated. This means buyers will need to stay sharp, looking for builder incentives like price cuts or smaller homes, while hoping for a stronger balance between supply and demand to ease affordability challenges in the coming months.