Niccolo Carrara, Emerging Markets Economist 

BNP Paribas | Global Markets (Recorded 07 June 2023) 

• Our property update suggests there are still downside risks to house prices globally, especially in a scenario of tighter-than-expected financial conditions.
• Residential housing prices remain elevated in level terms, hurting affordability and investor sentiment.
• Our indicator suggests housing unaffordability is particularly acute in Southeast Asia, with a potential knock-on political and socio-economic effect.
• Economies with high levels of household debt and a large share of it issued at floating rates, such as in South Korea, are also more vulnerable to higher mortgage burdens, and at greater risk of a wave of defaults.
• With rate cuts an obvious prerequisite for lower mortgage rates, demand for borrowing is likely to weaken further in developed markets, where central banks have not yet completed their tightening cycles.

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