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Online property research house The Global Property Guide’s latest survey of house prices shows an uneven recovery in global housing markets in 1H2010.
East Asia is enjoying runaway house price booms in several markets.Singapore has been a spectacular performer with 34% house price increases y-o-y to end-2Q2010. Hong Kong and Australia have also seen strong y-o-y house price performances.
Europe, on the other hand, is very mixed, with Latvia up 9.4% and Finland up 9%. Latvia’s price rises have stalled, however, while severe house price declines continue in Ireland, Lithuania, Bulgaria, Iceland, Russia, Poland, Croatia,Spain and Slovakia. Ireland had the steepest price falls of all the countries covered.
Up until end-2Q2010, 18 of the countries surveyed saw house price increases, while another 18 countries saw declines. Last quarter’s figures are similar: house prices in 17 countries rose while 19 declined.
A momentum perspective:
• Only six countries saw bigger price decreases, or smaller increases, during the year from 2Q2009 to 2Q2010, than during the same period in 2009.
• Thirty countries, however, saw larger price increases or less severe declines than last year.
The Global Property Guide’s statistical presentation uses price changes after inflation, giving a more realistic picture than the more upbeat nominal figures usually preferred by real estate agents.
Huge house price rises prompt intervention by Asian governments
House prices in Singapore, Hong Kong, Taiwan and China surged strongly during the year to 2Q2010. Singapore had the highest increase of all the countries surveyed. House prices were up 34.03% till end-2Q2010, the highest recorded y-o-y increase since 1995.
Hong Kong followed with an increase of 21.42% till end-2Q, a huge improvement over last year’s price decline of 6.96%. Taiwan’s house prices were up 11.51% over the same period. Residential property prices in Shanghai, China, rose 5.78% during the period under review. China has reported strong price rises since mid-2009.
The region’s strong economic growth, low interest rates and increases in foreign demand fuelled skyrocketing house prices in these four countries, stoking fears of a property bubble. In June, the International Monetary Fund warned that “the booming Asian real estate markets may pose risks to financial stability.”
Governments have responded by implementing anti-bubble measures. Singapore, Hong Kong, Taiwan and China have tightened credit supply by lowering the loan-to-value ratio. Singapore and Hong Kong have also increased land supplies. China increased the downpayment requirement for second-home mortgages to 50% and Taiwan raised its interest rate to 1.375%, from a record low of 1.25%.
Unlike their neighbouring countries, Thailand, Indonesia and the Philippines’ property markets performed poorly. Political unrest in Thailand took its toll. In 2Q2010, Thai house prices were down 4.83% from a year earlier, but they recorded an impressive 10.49% gain during the three months to end-June.
The prices of condominiums in Makati, the Philippines, dropped 4.85% to end-2Q, while in Indonesia’s 14 main cities, prices were down 1.42% over the same period.
North America — Snail’s pace recovery, declining home sales
US house prices fell 3.31% to end-2Q2010 (FHFA figures), but rose in the last quarter by 0.42% (seasonal and inflation-adjusted) — the first quarterly increase since 2Q2009, and the highest since 2007.
However, the American housing market is bracing for a possible fall next quarter. Existing home sales slumped to 3.83 million units in July, down a record 25.5% from last year, after the home buyer tax credit expired. Furthermore, unemployment has remained high, at 9.5% in July.
In 2Q, Canadian house prices were up 1.47% compared with 2Q2009, but rose only 0.07% during the latest quarter, as Canada also struggled with declining home sales. The Canadian Real Estate Association reported a quarterly decline of 13.3% in national home sales activity in 2Q2010, due to stricter mortgage regulations and expectations of an interest rate hike.
Patchy progress in Europe
Surprisingly, Latvia performed the best in Europe in the period under review. Prices of standard apartments rose by an enormous 9.38% till end-2Q2010, based on prices published by Arco Real Estate.
Latvia had suffered the worst house price crash during the global economic crisis. Prices fell by 33.83% in 2008, and further plunged 52.81% in 2009. But in October 2009, house prices stopped falling and have since rallied, though that rally appears now to be petering out.
Finland, Norway and the UK posted strong increases in 2Q2010. House prices in Finland were up 8.89% over the year. In Greater Helsinki, prices rose 12.6% over the same period. Finland began to recover from the crisis as early as 3Q2009, and has experienced strong house price rises since then.
In Norway, house prices were up 6.6% over the year to end-2Q2010. After falling by an average of 6% in 2008, Norway’s house prices started picking up in 3Q2009, thanks to all-time low interest rates.
Based on data from Nationwide, house prices in the UK were up 5.87% till end-2Q2010. This was the third consecutive quarterly increase. Construction of new private houses was 17.7% higher in 2Q compared with the same quarter last year. The UK’s economy expanded by 1.1% in 2Q2010, its highest growth since the rebound in 4Q2009.
Many European countries that have not yet recovered from the crisis nevertheless experienced slower house price falls. These markets include Denmark, the Netherlands, France, Slovakia, Spain, Poland, Russia, Iceland, Bulgaria and Lithuania.
The house price downturn continues in Portugal, Croatia and Ireland. Ireland had the steepest house price drop among all countries in our table. In 2Q2010, Irish house prices were down 15.85% from a year earlier, and down 36.16% from their peak. Recovery is not expected this year, and according to the OECD, house prices in Ireland would have to fall by a total of 57% for the Irish be able to afford to buy houses again.
Latin America and the Caribbean (LAC)
The key Latin American housing markets have seen three years of strong price growth, and these price rises are widely said to continue. However, no official statistics are available, except in Colombia, where they are late.
Economic growth in the Caribbean may fuel housing markets. LAC GDP is expected to increase by 4% in 2010. No house price statistics are available for the Caribbean.
The Middle East house prices slows
Over the year to end-2Q2010, house prices in Israel were up 9.06%. However, prices declined by 2.15% during the last quarter, possibly as a result of government measures.
In Dubai, UAE, house prices rose by 5.66% to end-2Q. But the emirate’s recovery may be short-lived, as house prices fell by 4.17% during the last quarter. — www.globalpropertyguide.com
East Asia is enjoying runaway house price booms in several markets.Singapore has been a spectacular performer with 34% house price increases y-o-y to end-2Q2010. Hong Kong and Australia have also seen strong y-o-y house price performances.
Europe, on the other hand, is very mixed, with Latvia up 9.4% and Finland up 9%. Latvia’s price rises have stalled, however, while severe house price declines continue in Ireland, Lithuania, Bulgaria, Iceland, Russia, Poland, Croatia,Spain and Slovakia. Ireland had the steepest price falls of all the countries covered.
Up until end-2Q2010, 18 of the countries surveyed saw house price increases, while another 18 countries saw declines. Last quarter’s figures are similar: house prices in 17 countries rose while 19 declined.
A momentum perspective:
• Only six countries saw bigger price decreases, or smaller increases, during the year from 2Q2009 to 2Q2010, than during the same period in 2009.
• Thirty countries, however, saw larger price increases or less severe declines than last year.
The Global Property Guide’s statistical presentation uses price changes after inflation, giving a more realistic picture than the more upbeat nominal figures usually preferred by real estate agents.
Huge house price rises prompt intervention by Asian governments
House prices in Singapore, Hong Kong, Taiwan and China surged strongly during the year to 2Q2010. Singapore had the highest increase of all the countries surveyed. House prices were up 34.03% till end-2Q2010, the highest recorded y-o-y increase since 1995.
Hong Kong followed with an increase of 21.42% till end-2Q, a huge improvement over last year’s price decline of 6.96%. Taiwan’s house prices were up 11.51% over the same period. Residential property prices in Shanghai, China, rose 5.78% during the period under review. China has reported strong price rises since mid-2009.
The region’s strong economic growth, low interest rates and increases in foreign demand fuelled skyrocketing house prices in these four countries, stoking fears of a property bubble. In June, the International Monetary Fund warned that “the booming Asian real estate markets may pose risks to financial stability.”
Governments have responded by implementing anti-bubble measures. Singapore, Hong Kong, Taiwan and China have tightened credit supply by lowering the loan-to-value ratio. Singapore and Hong Kong have also increased land supplies. China increased the downpayment requirement for second-home mortgages to 50% and Taiwan raised its interest rate to 1.375%, from a record low of 1.25%.
Unlike their neighbouring countries, Thailand, Indonesia and the Philippines’ property markets performed poorly. Political unrest in Thailand took its toll. In 2Q2010, Thai house prices were down 4.83% from a year earlier, but they recorded an impressive 10.49% gain during the three months to end-June.
The prices of condominiums in Makati, the Philippines, dropped 4.85% to end-2Q, while in Indonesia’s 14 main cities, prices were down 1.42% over the same period.
North America — Snail’s pace recovery, declining home sales
US house prices fell 3.31% to end-2Q2010 (FHFA figures), but rose in the last quarter by 0.42% (seasonal and inflation-adjusted) — the first quarterly increase since 2Q2009, and the highest since 2007.
However, the American housing market is bracing for a possible fall next quarter. Existing home sales slumped to 3.83 million units in July, down a record 25.5% from last year, after the home buyer tax credit expired. Furthermore, unemployment has remained high, at 9.5% in July.
In 2Q, Canadian house prices were up 1.47% compared with 2Q2009, but rose only 0.07% during the latest quarter, as Canada also struggled with declining home sales. The Canadian Real Estate Association reported a quarterly decline of 13.3% in national home sales activity in 2Q2010, due to stricter mortgage regulations and expectations of an interest rate hike.
Patchy progress in Europe
Surprisingly, Latvia performed the best in Europe in the period under review. Prices of standard apartments rose by an enormous 9.38% till end-2Q2010, based on prices published by Arco Real Estate.
Latvia had suffered the worst house price crash during the global economic crisis. Prices fell by 33.83% in 2008, and further plunged 52.81% in 2009. But in October 2009, house prices stopped falling and have since rallied, though that rally appears now to be petering out.
Finland, Norway and the UK posted strong increases in 2Q2010. House prices in Finland were up 8.89% over the year. In Greater Helsinki, prices rose 12.6% over the same period. Finland began to recover from the crisis as early as 3Q2009, and has experienced strong house price rises since then.
In Norway, house prices were up 6.6% over the year to end-2Q2010. After falling by an average of 6% in 2008, Norway’s house prices started picking up in 3Q2009, thanks to all-time low interest rates.
Based on data from Nationwide, house prices in the UK were up 5.87% till end-2Q2010. This was the third consecutive quarterly increase. Construction of new private houses was 17.7% higher in 2Q compared with the same quarter last year. The UK’s economy expanded by 1.1% in 2Q2010, its highest growth since the rebound in 4Q2009.
Many European countries that have not yet recovered from the crisis nevertheless experienced slower house price falls. These markets include Denmark, the Netherlands, France, Slovakia, Spain, Poland, Russia, Iceland, Bulgaria and Lithuania.
The house price downturn continues in Portugal, Croatia and Ireland. Ireland had the steepest house price drop among all countries in our table. In 2Q2010, Irish house prices were down 15.85% from a year earlier, and down 36.16% from their peak. Recovery is not expected this year, and according to the OECD, house prices in Ireland would have to fall by a total of 57% for the Irish be able to afford to buy houses again.
Latin America and the Caribbean (LAC)
The key Latin American housing markets have seen three years of strong price growth, and these price rises are widely said to continue. However, no official statistics are available, except in Colombia, where they are late.
Economic growth in the Caribbean may fuel housing markets. LAC GDP is expected to increase by 4% in 2010. No house price statistics are available for the Caribbean.
The Middle East house prices slows
Over the year to end-2Q2010, house prices in Israel were up 9.06%. However, prices declined by 2.15% during the last quarter, possibly as a result of government measures.
In Dubai, UAE, house prices rose by 5.66% to end-2Q. But the emirate’s recovery may be short-lived, as house prices fell by 4.17% during the last quarter. — www.globalpropertyguide.com
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 823, Sep 13-19, 2010
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