The Financial Crisis: 10 Years On

This month marks the 10th anniversary of the start of the global financial crisis, an event that continues to impact and shape property markets around the world. Property values plummeted in markets worst affected by the 2007 crisis, and as house prices begin to recover, or build on existing recoveries, the improving landscape provides multiple opportunities for investors.

Which hotspots have recovered the most? TheMoveChannel.com compared official price growth figures for the last 10 years, compiled by Global Property Guide, with the portal’s own data to determine the rate of recovery in the world’s most popular investment markets. Out of the 20 most sought-after destinations, Austria is leading the way, with property values climbing 89.96 per cent since 2007. Australia has seen the second strongest price growth, of 76.19 per cent, ahead of Canada (72.95 per cent). South Africa (66.11 per cent), Indonesia (57.93 per cent) and Thailand (41.4 per cent) complete the top six.

“As the ripples of the financial crisis continue to play out around the world, strong house price growth is a significant factor in foreign investment appeal,” comments TheMoveChannel.com Director Dan Johnson. “Both Canada and Australia have emerged as particularly sought-after markets, most famously among Chinese investors. Overseas demand, though, also has a role to play in market recoveries: both countries have introduced foreign buyer taxes and restrictions in recent years to combat further price growth, driven by international purchases.”

Indeed, market recoveries are not straight-forward, with other factors that affect price growth including economic performance, employment rates, availability of finance, population growth, housing supply and tourism trends. As a result, the rate of recovery is not consistent even within single countries. Prices can recover rapidly in the immediate aftermath of a market collapse, before slowing down, or fall significantly for several years, before bottoming out.

For example, Australia and Canada are both enjoying some of the strongest price growth in the last five years, with property values rising 41.45 per cent and 36.55 per cent respectively. However, with prices already 76.19 per cent and 72.95 per cent above their 2007 levels, and with additional measures introduced by authorities, foreign buyers are facing several headwinds. Indonesia’s booming population, on the other hand, has fuelled prices on both a five-year and 10-year basis, with prices now 36.07 per cent higher than in 2012. With tourism surging and the market still developing, investors and wealthy buyers remain keen to invest in the nation’s real estate sector.

TheMoveChannel.com’s 10 Years On infographic therefore highlights the markets where prices have been rising the most compared to longer term performance. In Ireland, where prices are 31.19 per cent below their 2007 levels, values have climbed 45.8 per cent in the last five years, making it one of the most appealing European markets. In Spain, values have fallen -15.08 per cent since 2012, but have enjoyed positive growth in the last 12 months, making the country highly attractive and affordable. The same could soon be true of Greece, where house prices are 43 per cent below their 2007 levels, but have seen their decline slow significantly to -30.25 per cent in the last five years, as the market gradually bottoms out. In Portugal, where prices are 8.16 per cent below their 2007 levels, values have risen 5.03 per cent over the last five years, fuelling growing international demand.

The USA (34.68 per cent) and UK (26.93 per cent) have both seen significant price growth in the last five years, but with values only 8.7 per cent and 17.07 per cent above their 2007 levels respectively, their strong economies and stable market fundamentals have upheld overseas interest, despite other factors, such as Brexit and the strong US dollar.

“When considering capital growth alone, it is important to compare current market performance with wider context,” adds Johnson. “Our research highlights the markets where performance is strongest in the last five years relative to their performance since the financial crisis. Ireland, the USA, Spain, Portugal, Greece and the UK are all markets that are enjoying significantly improved price performance now than their overall growth since 2007. They are also among the most sought-after markets on TheMoveChannel.com, with Portuguese popularity at a nine-month high in our latest Top of the Props report and foreign sales of Spanish real estate breaking new records earlier this year.”

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