Housing markets face a brutal squeeze

years during the covid-19 pandemic, home-sellers in Quakers Hill, a suburb in the farthest reaches of Sydney’s sprawling west, raked in fortunes. Some 60 or 70 viewers would traipse round every house up for sale, recalls Josh Tesolin of Ray White, an estate agent. Buyers jostled at auctions, bidding well above the odds. “We’d ask for, let’s say, $1m and sell at $1.4m,” says Mr Tesolin. “The market back then was crazy—a very different picture to now.” This year prices in the neighbourhood have fallen by 20%, he estimates. Owners are pulling their homes, because they cannot sell them for as much as they want. The market is gumming up.Australian house prices have dropped for five straight months, placing Quakers Hill at the forefront of a global trend. As central banks race to tame inflation, they are raising interest rates at the fastest pace in at least four decades—which is now translating into housing-market carnage. Prices are falling in nine of the 18 countries monitored by Oxford Economics, a consultancy, and are dropping fastest in the most overheated markets. In Canada and Sweden they have fallen by more than 8% since February; in New Zealand they have fallen by more than 12% since their peak last year. Prices have begun sliding in America and Britain, too. Many other countries are heading in the same direction.