Bank of Japan Hikes Rates to 31-Year High; US Mortgage Rates Reach 7%
Global real estate markets face tightening conditions as central banks continue rate hikes, pushing mortgage costs higher and dampening buyer demand.
The story
The global real estate landscape continues to navigate a period of tightening monetary policy, with significant moves observed this week. In Asia, the Bank of Japan, on September 18, 2026, raised its policy interest rate from 1.0% to 1.25%, marking a 31-year high.
This decision, aimed at curbing inflation fueled by elevated crude oil prices and a weaker yen, has sparked concerns among Japanese variable-rate mortgage holders [15, 20, 26]. Meanwhile, in the United States, mortgage rates continued their upward trajectory, with the 30-year fixed-rate mortgage averaging 6.95% on September 18 and inching up to 7% by September 19 [25, 43].
This follows the Federal Reserve's recent rate hike and signals from Chair Kevin Warsh that further increases remain possible [4]. Across the Atlantic, European markets present a mixed picture.
Germany's residential property prices saw a 2.2% increase in Q1 2026, continuing a recovery, yet the low spread between yields and rates is creating pressure [8, 33]. Portugal's market, however, exhibits a paradoxical trend of rising revenues despite falling sales volumes, with property prices surging 18.6% in early 2026, largely due to foreign demand, prompting warnings of overvaluation from the Bank of Portugal [20].
G20 + UAE this cycle
| Country | Price Yoy Pct | Prime Yield Pct | Mortgage Rate Pct | Direction |
|---|---|---|---|---|
| United States | +2.3% (Jun 2026) | N/A | 6.95% (Sep 2026) | tightening |
| Canada | N/A | N/A | 2.25% (policy rate, Sep 2026) | tightening |
| Mexico | +7.3% (Jun 2026) | N/A | 11.42% (H1 2026) | flat/easing |
| Brazil | +4.15% (Jun 2026) | N/A | 11.22% (Jun 2026) | flat/easing |
| Argentina | +1.3% (last 12 months) | 6% | 29.76% (May 2026) | cooling |
| United Kingdom | N/A | N/A | N/A | flat |
| France | +0.7% (H1 2026) | N/A | N/A | flat/easing |
| Italy | +1.5% (H1 2026) | N/A | N/A | flat/easing |
| Germany | +2.2% (Q1 2026) | N/A | 3.74% (10-year fixed) | tightening |
| South Africa | +5.2% (Jun 2026) | N/A | 10.50% (Jun 2026) | tightening |
| Turkey | +24.40% (May 2026) | N/A | 40.34% (Jun 2026) | easing |
| Saudi Arabia | +1.30% (Q2 2026) | N/A | 4.5% (2026) | cooling |
| Russia | +8.23% (Q2 2026) | N/A | 10.18% (May 2026) | tightening |
| China | -3.0% (Aug 2026) | N/A | 3.06% (Mar 2026) | easing |
| India | +4.21% (Mar 2026) | 3% | 8.0% (2026) | flat |
| Indonesia | +0.61% (Mar 2026) | N/A | 5.25% (policy rate, May 2026) | tightening |
| South Korea | +2.9% (Aug 2026) | N/A | 5.9% (Sep 2026) | tightening |
| Japan | -0.84% (Jun 2026) | N/A | 1.2% (Sep 2026) | tightening |
| Australia | N/A | N/A | 4.35% (cash rate, Aug 2026) | tightening |
| UAE | +6.09% (Apr 2026) | N/A | 4.35% (Aug 2026) | cooling |
UAE corner
Dubai's real estate market continues to evolve, with recent discussions highlighting the impact of Golden Visa rule changes. Since February 2026, the Dubai Land Department (DLD) has allowed off-plan and mortgaged properties to qualify for the AED 2 million Golden Visa threshold, provided the DLD-registered value is met [40].
This adjustment has significantly broadened the eligibility criteria, opening the long-term residency pathway to a wider pool of international investors. The ongoing expansion of freehold zones across the city further supports this trend, as Golden Visa eligibility through property ownership generally requires the asset to be within a designated freehold area [39]. This regulatory shift is reshaping buyer profiles and investment decisions in Dubai.
India corner
Non-Resident Indian (NRI) engagement in the Indian real estate market remains active, with the Indian Property Investment Festival continuing its USA tour in September 2026, connecting developers with the NRI community [18]. Domestically, tier-1 cities are seeing varied but notable movements.
Hyderabad's real estate market, for instance, has recorded an 11% year-on-year increase in price levels, with average prices reaching ₹5,518 per square foot [40]. This growth is largely attributed to a significant shift towards premium properties, with 52% of sales now falling into this category [40]. The Reserve Bank of India has held its repo rate steady through mid-2026, influencing home loan affordability [19].
Residency-by-investment
Golden Visa
Country: Portugal
Threshold: €500,000 (investment funds), €250,000 (cultural donations)
What Changed: Property purchase routes were removed. Citizenship timeline extended from 5 to 7-10 years (effective May 2026) [11, 22, 24].
Golden Visa
Country: UAE
Threshold: AED 2,000,000 (registered property value)
What Changed: Off-plan and mortgaged properties now qualify, provided the DLD-registered value meets the threshold (effective February 2026) [40].
Spotlight country
Germany's real estate market presents a nuanced picture this week. While residential property prices in Germany saw a 2.2% increase in the first quarter of 2026, signaling a continued recovery from previous downturns, the broader market faces significant headwinds [33].
The impact of central bank rate hikes is keenly felt, with the spread between yields and rates becoming notably low, putting pressure on investment returns [8]. The investment side, particularly for office and residential sectors, is still struggling to regain momentum, with Q1 2026 volumes remaining below long-term averages [5]. Despite these challenges, demand for high-quality office space and residential rentals is on the rise, driven by limited supply and a "flight to quality" among occupiers [17].
The contrarian view
Zillow Research, in its September 18, 2026, forecast, offers a cautious outlook, stating that the housing recovery is "back on pause" for the remainder of the year [6]. Mischa Fisher, writing for Zillow, predicts existing home sales will decline by 3.5% year-over-year in the fourth quarter, an acceleration from previous projections [6]. This view is supported by continuously building inventory, which grew 10.1% year-over-year, and persistently high mortgage rates [6].
What we'll be watching
- Reserve Bank of Australia (RBA) cash rate announcement on September 29, 2026.
- FHFA House Price Index for July 2026, due September 29, 2026.
- Bank of Canada interest rate decision on October 28, 2026.
- European Central Bank (ECB) rate decision on October 29, 2026.
- Bank of Japan's next monetary policy meeting on October 29-30, 2026.
Reporting + analyst voices: grounded via Google Search at publish time.