2020 housing market outlook: more moderate but still positive

Two opposing events have had an impact on our residential real estate outlook for 2020 : i/ ultra-accommodative monetary conditions for longer, ii/ a slowdown in the global economy . D omestic demand has been relatively resilient to external headwinds in 2019 and should stay so owing to the low interest rate environment . Meanwhile, global growth and manufacturing activity , which weakened in 2019, are likely to regain some momentum on the back of the resolutions of Brexit and trade war related uncertainties . Overall, w e remain positive that expansionary policies will keep growth afloat yet risks of weaker than expected global trade spreading to the domestic economy cannot be ruled out . The gradual yet notable reduction in unemployment over the recent years have boosted household disposable resources . While improvements in employment will increasingly become less robust, tightness in most labour markets will further bolster wage growth and household purchasing power in the period ahead . Overall, we expect hous ing demand to develop robustly on the back of resilient employment , rising wages and accommodative financial conditions . Yet, global woes, which are unlikely to dissipate fully (Chin a’s structural growth slowdown is just one ex a mple ) , are set to keep c onfidence and sentiment in check , potentially curbing housing market activity . Also, there are important market-specific risks, which should be considered (rental freeze in Berlin, local elections in France, wildfires in Australi a are just few examples ). In addition, implementation of macroprudential measures along with low fertility and weaker migration inflows will lessen demand for housing in the longer run .