Shaky property markets across much of the world pose another risk to the global economy as higher interest rates erode household finances and threaten to exacerbate falling prices.

Reports this week show the US housing slump stretched into a fifth month, China’s home sales slide continued, and price declines persisted in both Australia and New Zealand.

Sliding home values threaten to undermine consumer confidence and weigh on household spending, which was a rare bright spot for the global economy last year. Investment too could take a hit as developers scale back projects in response to falling prices, waning demand and higher borrowing costs.

In the US, last year’s run-up in mortgage rates cast a chill on the housing market, leading to the worst annual drop in sales of previously owned homes in more than a decade. That has put pressure on prices.

That strain is set to continue during the Federal Reserve’s campaign to tackle inflation. Policymakers are widely expected to raise rates by a quarter percentage point at the conclusion of a two-day gathering today (AEDT), to a range of 4.5 per cent to 4.75 per cent.

In the world’s No. 2 economy, China’s property slowdown is showing few signs of abating, even as authorities ramp up efforts to revive the industry. New home sales tumbled 32.5 per cent in January from a year earlier, preliminary data showed this week.

Officials have taken steps to ease financing to cash-strapped developers, unwinding a deleveraging campaign that triggered a wave of defaults and dragged on growth.

Local authorities have also stepped up efforts to stimulate home buying, including by cutting mortgage rates and easing down-payment requirements. Such steps are unlikely to boost sales until mid-year, according to Bloomberg Intelligence analyst Kristy Hung.

Ongoing weakness in China’s property market is a potential headwind to Nomura Holdings’ otherwise upgraded view of this year’s growth prospects, economists let by Ting Lu wrote in a note on Tuesday. They cited the official narrative that ‘‘housing is for living and not for speculating’’, and declining prices as brakes on speculative demand.

Prices continued to fall in Australia and New Zealand in January, with the slide likely to continue as neither property market has yet felt the full brunt of last year’s interest rate spike.

Many NZ households are on fixed-rate mortgages that have yet to roll over to a new, higher rate. As a consequence, economists are predicting house prices will fall further and will be at least 20 per cent below their late-2021 peak by early 2024.

In Wellington, prices have fallen 18.1 per cent from a year earlier, CoreLogic data shows. In Auckland, prices are down 8.2 per cent.

It’s a similar story in Australia, where a spike in loan repayments for those whose mortgages switch to higher variable rates this year is set to weigh on consumption, a Bloom-berg Intelligence report says.

Repayments on 15 per cent of home loans could jump by more than 80 per cent when their ultra-low fixed rate expired, analysts Mohsen Crofts and Jack Baxter said in the report. They estimate the hit to household income will be the equivalent of 2.2 percentage points of retail sales.

Housing is even cooling in Singapore, which has been more resilient than many other markets.