Iceland is leading global house price growth

Iceland is leading global house price growth for the first time.

The country saw property values increase 14.7 per cent in 2016, according to Knight Frank’s latest index. The country’s property market was boosted by a growing economy, which the IMF estimates rose by 4.9 per cent last year, but also climbing interest from foreign buyers, says the agency.

The result is a rankings table that markedly different from 12 months ago, with previous frontrunners Turkey and Sweden slipping down the rankings from 1st and 3rd to 5th and 20th.

“A weakening lira, a rate rise to 8 per cent and recent security concerns have dented household confidence in Turkey,” says Knight Frank, while new lending rules introduced in June 2016 have helped to halve price growth from 12.3 per cent in 2015 to 6.1 per cent in 2016.

China, on the other hand, jumped from 43rd position in the rankings in 2015 to 7th in 2016 with average prices now increasing by 10.8 per cent per annum, according to the country’s National Bureau of Statistics. That momentum, however, may not last long, as the country has already introduced lending restrictions in the hottest market areas to combat soaring values.

Overall, the index paints a positive picture of the global real estate world, with house prices around the world up by an average of 6 per cent in 2016, up from 4.1 per cent in 2015, the highest annual rate recorded since the first quarter of 2014. The number of housing markets recording price rises has increased from (43 in 2015 to 47 in 2016).

Although mainstream housing markets in the US (5.8 per cent) and the UK (4.5 per cent) recorded similar levels of annual price growth in 2016, the growth rate in the US increased compared with last quarter, while the UK drifted lower. A strong economic outlook and buoyant employment forecasts are boosting US household confidence.

In Europe, the Baltic states are quietly creeping up the rankings. Lithuania, Estonia and Latvia all sit within the top 20 and together averaged 9.9 per cent growth in 2016, up from 5.2 per cent a year earlier.

At the bottom of the table, Ukraine, Taiwan, Singapore and Cyprus continue to be characterised by weak growth either due to ongoing political crises, economic fragility or cooling measures.

“With higher inflation and diverging monetary policies expected in 2017, we may see a widening gap between the strongest and weakest performing market,” says Knight Frank.


Turkey tops global house price growth, with New Zealand close behind

8th December 2016

Turkey continues to top global house price growth, with property values surging by double-digits in the third quarter of 2016. This is the fifth quarter in a row that the country has been the fastest-climbing housing market in the world, according to Knight Frank’s latest global house price index, with values up 13.9 per cent year-on-year.

Indeed, Turkey has been among the most popular destinations on in the last year. The country, though, faces a fresh contender in the capital growth stakes, with New Zealand hot on its heels: the country has seen prices rise 13.9 per cent in the year to Q3 2016, ahead of Iceland (12.9 per cent) and Canada (11.7 per cent). Indeed, both New Zealand and Canada have raised concerns about the volume of international investment in their housing markets, particularly in Auckland and Vancouver, due to their rapidly climbing house prices.

Along with Lithuania, they are the only countries to see property prices rise by double-digits, as Knight Frank highlights a continuing trend of converging price performance. Three years ago 22 per cent of countries recorded double-digit annual price growth.

Prices have risen in 44 of the 55 countries we track over the past year, resulting in a weighted average rate of 5.3 per cent across the Global House Price Index, the highest rate for two years.

America has helped to drive that growth. The expected slowdown in US house prices in the run up to the Presidential Election failed to materialise. The monthly increase of 0.8 per cent in September was the largest since August 2013 contributing to an annual increase of 5.5 per cent.

The UK is also showing some resilience following the vote to leave the European Union in June. Average house prices rose 1.3 per cent in the three months after the referendum and 5.4 per cent in the 12 months to September. The market remains underpinned by the fundamentals of undersupply and low mortgage rates.

China, similarly, has seen price inflation driven by supply shortages and pent-up demand in its major urban centres, with more than 20 Chinese cities introducing new tightening measures aimed at cooling price growth.

“The consensus view is that 2017 will be a bumpy ride both economically and politically, with stimulus coming in the form of fiscal rather than monetary policy,” says Knight Frank. “That said, low rates are likely to persist in Europe at least, but hikes in the US will result in a stronger dollar with implications for global capital flows and emerging markets.”

The report shows that Turkish house price growth is slowing, with quarterly growth at 3.5 per cent, behind New Zealand’s 5.8 per cent, Iceland’s 7 per cent and Canada’s 4.3 per cent. Will 2017 see Turkey lose its top spot?

“With a growing list of challenges including resurgent price growth in China, Brexit and an expected US rate rise it’s unlikely to be ‘business as usual’ next quarter,” adds the report.


Sweden leads house price growth

7th September 2016

Photo: MRLins

Sweden is leading house price growth around the world, according to new rankings from the IMF. The country’s top spot, though, is facing some surprising competition.

The IMF’s latest global house price report compares markets across the globe, based on the most recent data it has available. Sweden raced ahead of the rest of the world in its latest report, with house price growth of 14 per cent year-on-year. New Zealand is hot on its heels, with price growth of 11 per cent. Indeed, the latter country has now introduced mortgage lending caps in a move to discourage property investors and thereby cool house price growth.

While both countries are familiar names when it comes to high house prices, though, they are facing some surprising competition. Each country’s ranking is based on IMF data from Q4 2015. In third and fourth place, also based on Q4 2015 figures, are Hungary and Lithuania, with price rises of 10.95 and 10.96 per cent respectively.

The country with the highest price rise based on the most recent data, though, is Qatar, with real estate values shooting up 8.46 per cent in Q1 2016. Turkey is close behind with prices up 7.19 per cent in Q1 2016.

The rise of Sweden, Turkey and New Zealand is confirmed by similar data from Knight Frank’s Global House Price Index, with Turkey topping annual growth in Q2 2016 with a price surge of 13.9 per cent. New Zealand is in second place with an equally scorching 11.2 per cent. Canada and Chile are the third and fourth hottest markets, according to Knight Frank, with Sweden in fifth, boasting growth of 8.9 per cent.

“Over recent quarters Turkey, Sweden and New Zealand have occupied the top positions in our Global House Price Index whilst key Asian markets have dominated the lower ranks,” says Kate Everett-Allen, Knight Frank’s Head of International Residential Research. “The overall aggregate index has followed a similar narrative, consistently recording 4% annual growth, or thereabouts, for the
last two years.”

The extreme ends of Knight Frank’s chart, though, are moderating, with the difference between the strongest and weakest markets shrinking from 33 percentage points in Q2 2016 to 23. Turkey and Sweden, meanwhile, have seen price growth slow in the last quarter, from 19 per cent and 13 percent to 14 per cent and 9 per cent respectively.

Knight Frank highlights Brazil as under-performing, in particular, with the build-up to the Olympic Games apparently unable to counterbalance Brazil’s slowing economy, with house prices slipping 0.7 per cent year-on-year in Q2 2016.

With the main Rio 2016 Olympics over, eyes in the coming months will turn instead to the UK and the US. Both housing markets have been level pegging in the last year, recording annual growth of 5.2 per cent and 5.1 per cent respectively. In the UK, experts wait to see the impact of the recent Brexit vote in the medium-term, while in the US, the presidential election will determine how investors react to the country’s recovering real estate.

Qatar, though, is not in Knight Frank’s global house price index, which could place the unsuspecting GCC market alongside Sweden in the world’s hottest market rankings.

Activity from international investors in Sweden has increased rapidly over the past two years, according to Savills, with cross-border investment rising steadily since 2009. Last year, foreign investors accounted for 21 per cent of total transaction volume – and that share rose further to 24 per cent in the first quarter of 2016.

Total investment in Qatari real estate, meanwhile, rose 10 per cent in 2015 year-on-year to reach QAR56.13 billion. According to the Qatar Central Bank, nationwide prices rose 4.15 per cent in Q2 2016 year-on-year, far lower than its 23.16 per cent rise in the same period of 2015, which suggests it, like Turkey and Sweden, may now be cooling. The looming 2022 FIFA World Cup could bring Qatari property into the spotlight, however. Will Sweden’s house price crown remain unchallenged for much longer?