Global slow­down to be fol­lowed by grad­ual re­cov­ery of house prices

The ups and downs of the global prop­erty mar­ket paint a mixed pic­ture, but hope is on the hori­zon for 2012. Sharon Dale re­ports.

Yorkshire Post - Property - - PROPERTY -

GLOBAL house prices in­creased by 1.8 per cent in the year to March, the low­est an­nual rate of growth recorded since the last quar­ter of 2009, ac­cord­ing to the lat­est re­sults from the Knight Frank Global House Price In­dex.

House prices in 25 of the 50 coun­tries in­cluded in the in­dex re­mained flat or saw neg­a­tive growth in the first three months of 2011, com­pared with only 18 coun­tries a year ear­lier.

Asia was the top-per­form­ing con­ti­nent, record­ing 8.4 per cent growth over the past 12 months. How­ever, this was down from 17.8 per cent a year ear­lier. The weak­est re­gion was North Amer­ica, which saw a fall of 0.4 per cent in val­ues in the year to quar­ter one 2011.

House prices in Europe were static for the first three months of the year, though the UK saw a one per cent in­crease. This rep­re­sents an im­prove­ment on a year ago when Euro­pean house prices had fallen 4.1 per cent over the pre­vi­ous year.

The strong­est per­form­ing coun­tries are Hong Kong, which recorded a 24.2 per cent an­nual rise in prices, and where the gov­ern­ment is fight­ing to get in­fla­tion­ary pres­sures un­der con­trol, In­dia, which saw a 21.9 per cent growth, and Tai­wan, with 14.3 per cent.

Liam Bai­ley, head of res­i­den­tial re­search at Knight Frank, says: “Price growth, while not stalling, has fal­tered in quar­ter one of 2011, point­ing to on­go­ing prob­lems un­der­ly­ing the world’s hous­ing mar­kets. In quar­ter four of 2010, over­all an­nual price growth stood at 3.3 per cent. Three months later, this shrank to 1.8 per cent.

“A cur­sory glance at the re­sults ta­ble would sug­gest it’s busi­ness as nor­mal, with Asian coun­tries firmly planted at the top of the ta­ble and both Europe and North Amer­ica lan­guish­ing be­hind. But there are a few less pre­dictable re­sults.

“House prices in Rus­sia, for ex­am­ple, fell 13.7 per cent in the first three months of this year po­si­tion­ing it be­low Ire­land in the rank­ings.

“On the other hand, France has jumped to sixth place in the rank­ings, up from 30th a year ear­lier. Swe­den and Ger­many, by com­par­i­son, have ex­pe­ri­enced sev­eral quar­ters of pos­i­tive growth only to fall back in quar­ter one 2011.

“In most of these cases, with the notable ex­cep­tion of Ger­many, the hous­ing mar­ket is re­flect­ing the wider econ­omy’s per­for­mance as well as re­spond­ing to do­mes­tic pol­icy de­ci­sions.

“In Rus­sia, the gov­ern­ment’s mass affordable hous­ing pro­gramme is boost­ing sup­ply and low­er­ing the av­er­age price through­out the coun­try, de­spite the av­er­age price grow­ing in Moscow and St Peters­burg.

“House prices in France look to be mir­ror­ing the coun­try’s im­prov­ing eco­nomic sce­nario and greater pro­duc­tiv­ity is boost­ing wages, con­sumer spend­ing is up and, like­wise, prop­erty de­mand.

“Glob­ally, the slow­down in an­nual price growth to 1.8 per cent is largely at­trib­ut­able to the poor per­for­mance in the first three months of this year. In quar­ter one 2011, 50 per cent of coun­tries saw flat or neg­a­tive growth, a year ear­lier this ap­plied to only 38 per cent of coun­tries in­cluded within the in­dex.

“The ef­forts on the part of Asian gov­ern­ments to cool house price in­fla­tion in the past year have been largely suc­cess­ful, al­though the lat­est fig­ures sug­gest Hong Kong’s hous­ing mar­ket is prov­ing less re­spon­sive.

“In quar­ter one 2010, an­nual in­fla­tion stood at 30.4 per cent; this fell to 25 per cent in quar­ter two 2010 and 22.1 per cent in quar­ter four 2010, but has now re­bounded to 24.2 per cent. De­mand from main­land China is a key driver – ac­count­ing for nearly one in four Hong Kong prop­erty pur­chases. The Chinese mar­ket by com­par­i­son has seen an­nual price growth fall from 49 per cent in quar­ter one 2010, to a more sus­tain­able 8.4 per cent.

“Ad­di­tional mea­sures are be­ing adopted by the Hong Kong gov­ern­ment to curb in­fla­tion by launch­ing a new mort­gage data­base. Banks may refuse mort­gage ap­pli­ca­tions, lower loan-to-value ra­tios or of­fer higher mort­gage rates if ap­pli­cants do over­shad­owed by Ire­land’s 4.5 per cent de­cline over the same pe­riod. In­ter­est­ingly, Greece and Por­tu­gal are show­ing signs of im­prove­ment.

“The Mid­dle East pro­vides an im­prov­ing pic­ture. Dubai has seen price growth re­gain pos­i­tive ter­ri­tory in the last six months.

“In sum­mary, we ex­pect to see the cur­rent slow­down in global hous­ing mar­kets to con­tinue, hit­ting a low point in quar­ter four 2011, as­sum­ing the Asian mar­kets con­tinue to cool.”

HIGH LIFE: Over­heated? Hong Kong has seen the largest an­nual house price growth.

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