Will 2011 be the turn­ing point?

Business Day - Home Front - - HOMEFRONT -

WILD RIDE Af­ter al­most 15 years of ris­ing prop­erty prices in the vast ma­jor­ity of global prop­erty mar­kets — and by as much as 300% in some mar­kets — the last half of the decade was a roller­coaster ride for the global prop­erty in­dus­try. The sub-prime cri­sis emerged in the US in 2006, and rocked the global fi­nan­cial sys­tem. Prop­erty prices de­clined by an av­er­age of around 17% across the globe over the next two years.

How­ever, global house prices showed signs of re­cov­ery in 2009, grow­ing by around 10% on av­er­age. The lat­est sur­vey of the Global Prop­erty Guide re­veals that 17 out of 35 coun­tries recorded in­creases in house prices over the year to end Q3 last year, based on in­fla­tion-ad­justed house price changes. Of the 18 coun­tries that ex­pe­ri­enced house price falls, 11 recorded slower rates of de­cline. “This re­cov­ery brought global house prices to lev­els around 9% be­low the peaks recorded be­fore the down­turn,” says Peter Gil­mour, chair­man of RE/MAX of South­ern Africa. “Of course, there are wide dif­fer­ences in the per­for­mances of lo­cal prop­erty mar­kets. In ad­di­tion, prop­erty prices have, in the last few months, showed signs of de­cline again. This can, to some ex­tent, be as­cribed to the fact that the stim­u­lus pro­vided by ag­gres­sive rate cut­ting has been ab­sorbed by mar­kets. The on­go­ing dif­fi­culty of ac­cess­ing fi­nance also con­tin­ues to con­strain sub­stan­tial re­cov­ery.”

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