Is there a potential for a decrease in property prices in the near future?

The interest rate landscape is evolving, with several key developments shaping the financial landscape for the foreseeable future.

In the European Union, the European Central Bank (ECB) is expected to lower interest rates during the year, but not immediately. This move, aimed at stimulating economic growth, could further lower loan terms, but they will not reach the levels experienced previously. The ECB is being cautious due to the damage caused by letting inflation get out of hand and rebuilding trust.

Meanwhile, in the United States, the Federal Reserve (Fed) faces increased expectations for a rate cut in September 2024, now seen as nearly 90% likely by markets. This contrasts with the ECB, where only a 5% chance for a move in September 2025 has been projected, and most analysts project further cuts as unlikely this year.

The short-term interest rates are currently relatively high, but they are expected to decrease significantly in the medium term. This trend is contributing to the market's upward trend, with the markets currently setting records for various investments, including stocks, cryptocurrencies, gold, and oil.

However, expecting to get higher interest rates in the foreseeable future would be a risky speculation. The interest rates on savings accounts, currently around 3%, are not sustainable and are expected to decrease quickly. Shifting money to a fixed-term deposit account over a longer period is possible, but it depends on one's planning and time horizon. If one needs money for a very long time, they should invest it differently.

The interest rate market trades in the future, and significantly lower interest rates are expected for the future than the current rates. The yield curve indicates that interest rates have already gone down significantly. However, a slower decrease in interest rates than expected by the markets would mean that interest rates would decrease more slowly than anticipated.

It is essential to make investment decisions based on one's planning and time horizon. If one has a clear time horizon, they should consider the interest rate they can earn over that period. For potential property buyers, slightly better loan terms due to the current market trends may be expected.

Ultimately, the future is unpredictable, and one cannot see into it. The markets have already factored in part of the expected interest rate cut, and the ECB is being careful to avoid repeating past mistakes. As always, it's crucial to stay informed and make decisions that align with one's financial goals.