A global measure of house prices fell slightly after inflation was taken into account during the final quarter of 2025. For millions of people hoping to buy or rent a home, however, housing does not seem to be getting any more affordable.
According to the Bank for International Settlements (BIS), its global aggregate of real residential property prices declined by 0.6% year over year in the fourth quarter of 2025.
Real house prices are adjusted for consumer-price inflation. This shows whether property prices are rising faster or more slowly than the general cost of living, but it is not a complete measure of housing affordability.
In fact, nominal global house prices—the prices buyers would actually see—still increased by 2.1% over the same period. The real-price measure fell because property prices rose more slowly than consumer prices.
The BIS global figure is also a weighted average covering 57 reporting jurisdictions. Larger economies have a greater influence because the calculation uses rolling GDP and purchasing-power-parity exchange rates.
Most countries still recorded price increases
The slight global decline does not mean that house prices were falling across most countries.
Real residential property prices increased by 0.4% across advanced economies during the fourth quarter of 2025, while they declined by 1.4% across emerging market economies.
There were also large regional differences.
Real prices rose by 3% in the euro area and by 1.2% in non-euro European advanced economies. They increased by 4% in emerging Europe and by 2.6% in Latin America.
The small subset of African economies covered by the BIS—Morocco and South Africa—recorded an aggregate increase of 1.4%.
Emerging Asian economies moved in the opposite direction, recording an aggregate decline of 3.2%.
Across the 57 jurisdictions, the median year-over-year increase was close to 2%. The BIS said 70% of advanced economies and 60% of emerging market economies recorded real price increases of between 0% and 10%.
A relatively small number of large economies, particularly China, pulled the weighted global average down.
Some countries are moving in completely different directions
The differences become even clearer when individual jurisdictions are compared.
During the fourth quarter of 2025, North Macedonia recorded the largest year-over-year increase in real residential property prices, at 20%. Hungary followed with 17%, while Portugal recorded an increase of 16%.
At the other end of the scale, real prices declined by 6% in both China and Canada and by 4% in New Zealand.
The longer-term picture is equally varied.
Since the end of 2019, just before the COVID-19 pandemic, real global house prices have increased by almost 3%.
Among G20 jurisdictions, Türkiye recorded a 109% increase. Real house prices rose by 22% in both Australia and Mexico.
China, meanwhile, recorded a 20% decline, while prices in Canada fell by 7%.
Compared with 2010, the BIS global aggregate of real residential property prices was almost 20% higher at the end of 2025.
However, real prices remained below their 2010 levels in several G20 economies. They were 24% lower in Italy, 13% lower in China, 10% lower in South Africa, 9% lower in Brazil and 6% lower in Indonesia.
Falling real house prices do not necessarily mean affordable homes
A decline in real house prices might sound like good news for buyers, but house prices and housing affordability are not the same thing.
An OECD policy brief published on July 3, 2026, highlighted the scale of the longer-term problem.
Over the past three decades, real house prices have increased in nearly all OECD countries. Housing-related spending has also accounted for a growing share of total household consumption.
Earnings have not kept pace with the increase in housing costs. As a result, many households must devote a larger proportion of their budgets to mortgages or rent, leaving less money for other expenses.
A decline in real prices does not necessarily mean that the advertised price of a home has fallen. As the latest BIS figures demonstrate, nominal prices can continue rising while real prices decline after inflation is taken into account.
Financing costs can create an additional obstacle. Even where the purchase price of a home falls, a higher mortgage rate can leave a buyer facing similar or larger monthly payments.
A modest movement in prices over one year may therefore do little to reverse decades of deteriorating affordability.
Young people are feeling the pressure
The affordability problem is particularly serious for younger adults.
Between the 1980s and the mid-2010s, homeownership rates among people aged 25 to 34 declined in Australia, Denmark, Germany, the Netherlands, the United Kingdom and the United States, according to research cited by the OECD.
Italy and Norway were notable exceptions. Young adult homeownership increased by 5 percentage points in Italy and 8 percentage points in Norway over the periods examined.
As access to homeownership has become more difficult, more people have turned to the rental market.
On average across the OECD, the share of private-market tenants spending more than 40% of their disposable income on rent increased from 12.8% in 2012 to 17.9% in 2023.
The pressure is particularly severe among poorer households. Around two in five low-income tenants spend more than 40% of their disposable income on rent.
Meanwhile, in more than half of OECD countries, most people between the ages of 20 and 29 live with their parents.
Why aren’t more homes being built?
One response to high housing costs is to build more homes, but increasing supply is not always straightforward.
The OECD identified several constraints, including rising construction costs, shortages of construction workers, higher borrowing costs for developers, restrictive land-use policies and limited land for development in areas where demand is strongest.
Short-term rentals can intensify pressure on housing availability in some locations, while low levels of public investment have contributed to shortages of affordable housing.
Demand has also changed. Population aging, migration and a shift toward smaller and more numerous households have placed additional pressure on housing supply in many markets.
The importance of each factor varies considerably between countries and even between cities within the same country.
There is also relatively little social rental housing available in many places.
Social rental housing represents less than 5% of the total housing stock in around two-thirds of OECD countries. Only the Netherlands, Austria and Denmark have shares exceeding 20%.
High housing costs affect the wider economy
Unaffordable housing does not affect only buyers and tenants. It can also have consequences for the wider economy.
People may be unable or unwilling to move to areas where suitable jobs are available because housing there is too expensive. According to the OECD, reduced residential mobility can worsen skills shortages and mismatches between workers and available jobs, making labor markets less resilient.
A well-functioning housing market can also affect how efficiently workers and other economic resources are allocated, with potential consequences for productivity and the economy’s ability to respond to shocks.
The OECD also cites evidence that increases in household spending on housing can have a negative effect on fertility rates.
Housing is one of the main ways households accumulate wealth. Large differences in access to homeownership and in property values can therefore contribute to unequal wealth accumulation.
In some OECD countries, there is also evidence that shortages of affordable housing have contributed to increases in homelessness and housing insecurity.
Can greater supply bring housing back within reach?
The OECD argues that expanding the supply of affordable and social rental housing should form an important part of the policy response.
Governments can support the development of new affordable housing, use public funding to mobilize private investment and work with public, nonprofit and limited-profit housing providers.
They can also make better use of vacant or underused properties. However, the OECD cautions that not every empty home can realistically be returned to the market. Some properties are in poor condition or located in places where housing demand is weak.
Policies intended to help buyers can also have unintended consequences.
Buyer subsidies, subsidized mortgages, mortgage guarantees and favorable tax treatment can increase demand. When the housing supply cannot respond, that additional demand can push prices higher and reduce affordability overall.
This helps explain the apparent contradiction in today’s global housing market.
The BIS global real-price index can decline even when most reporting jurisdictions record increases, because developments in large economies have greater influence over the weighted average. Real prices can also decline while nominal prices continue rising if property prices increase more slowly than inflation.
Meanwhile, affordability depends on more than a global price index. Household incomes, rents, mortgage rates, deposits and the availability of suitable homes all matter.
The BIS global aggregate may be edging down, but decades of rising property values and rents—compounded in many markets by expensive financing and limited supply—have left housing beyond the comfortable financial reach of many households.
For those hoping that a small decline in global real house prices signals the end of the affordability crisis, the evidence suggests there is still a long way to go.
