3 September 2008
Global residential property price inflation slowed to 4.7% in Q2 2008, down from 6.1% in the previous quarter, according to Knight Frank’s latest Global House Price Index.
The greatest annual price growth was once again recorded in Bulgaria, where average property prices rose by 32.2%, while average prices in Slovakia, Russia, Hong Kong and the Czech Republic all appreciated by over 25% during the year. Double-digit growth is also being recorded in Singapore, Cyprus and Columbia.
However, there was no such joy for the residential property market in Latvia, where the median price of a home plummeted 24.1% year-on-year, the greatest fall recorded in the index. Property price falls in Lithuania, Denmark and New Zealand have also quickened over the quarter. In fact, property prices are now falling in almost half the markets listed in the Knight Frank Global House Price Index.
Nick Barnes, head of international research, Knight Frank, said: “The Knight Frank Global House Price Index shows that global house price inflation is continuing to fall back, with much of continental Europe now seeing low or negative growth. Nevertheless, performance is very varied, with prices still rising rapidly in several locations in Asia and Eastern Europe.”
Here is a snapshot of Knight Frank’s latest Global House Price Index:
Europe:
Fuelled by a greater level of foreign direct investment (FDI) and a growing manufacturing sector, the property market in Bulgaria remains the best performing destination in the Knight Frank Global House Price Index.
Property prices in Slovakia are up 25% year-on-year, on the back of the country’s robust economy. The highest rates of growth were seen in Košice (58.6%), Nitra (58.1%) and Prešov (54.8%), while the Bratislava region showed an increase of 27.2%.
Property prices also shot up in neighbouring Czech Republic, up 25.4%, despite slower economic growth of 6.6%.
Price appreciation in Russia has picked up speed over the past quarter and now stands at 26.5%, compared to 21.7% during Q1 2008. The greatest price growth was recorded in the Republic of Khaksiya (88.2%), Growth in St Petersburg (41.5%) and Moscow (18.2%). However, average prices fell by 8.2% in the Chechen Republic.
Rising tourist levels and demand for holiday homes is driving prices rises in both Croatia (5.8%) and Cyprus (12.9%). However, there are signs that the latter market is beginning to plateau, but locations such as Limassol are still attracting buyers and seeing steep price rises.
Latvia continues to report the highest residential price falls in the Knight Frank Global House Price Index, with average values down 24.1% over the past year. However, along with Estonia (-16%), the rate of decline appears to be slowing. Prices in Lithuania are also depreciating, albeit at a slower rate of 9.9%.
Denmark’s property market, which peaked in Q3 2006, appears to be worst performing of all the Western European economies, with annual price falls of 9.6%, on the back of a slow economy, and a lack of available mortgage finance.
Property prices in Ireland continue to nosedive, down 8.1% year-on-year.
Prices in Norway are flat but there are signs that the economy is slowing and inflation is rising, which could leave the market vulnerable to price falls.
The property market slowdown in the United Kingdom continues, with no recovery expected until around 2010.
With a shortage in demand and a slowing economy, prices in Germany fell 2.5% year-on-year, down from 4.4% at the same time last year.
Spain’s property market difficulties have not yet been factored into its house price statistics, and the Knight Frank Global House Price index reports a rise of 2.4%.
Asia Pacific:
Prices in Singapore fell by 2% during the quarter, bringing annual growth to 16.3%, down from 29.9% three months ago. Further price falls are a genuine possibility.
The fastest property price growth in the region is being recorded in Hong Kong, where annual prices are up 25.1%.
Average prices in China are up 1.1% during the quarter, meaning that annual growth in the country is now 9.2%, compared to 7.1% at the same point last year. The greatest house price growth is being recorded in Urumqi (20.2%), Haikou (18.1%), Ningbo (14.7%), Beijing (14.3%), and Hangzhou (13.3%).
Indonesia is experiencing a cooling housing market, with prices rising by just 0.9% over the quarter. Annual house price inflation is now 4.4%. However, there are some concerns that the market is oversupplied as a result of the construction boom of recent years.
Australia has experienced a downturn in house price growth over the past quarter, with values dropping by 0.8%. Annual growth has now dropped to 9%, from 13.8% during Q1 this year.
Prices in New Zealand are depreciating at a slow pace, having fallen by 2.2% during the quarter. There is a large disparity between residential prices and average incomes. The prospects for further short-term price growth don’t look good.
The Americas:
Prices continue to fall in the USA, with values down 3.3% during Q2 of 2008, contributing to an annual decline of 16.8%, the second largest fall in the Knight Frank Global House Price Index. However, prices are still rising in some states, including Oklahoma (4.9%). States such as California and Florida have witnessed falls of more than 12%. There are signs of recovery in cities such as Denver, Boston, Charlotte and Dallas, although according to some measures prices fell by over a quarter over the last year in Las Vegas, Miami, Phoenix and Los Angeles. Continuing problems with accessing finance and the ongoing crisis in the ‘sub-prime’ sector continue to haunt the market.
Canada saw prices grow by 1.8% during Q2 2008. Prices are now 4.8% higher than a year ago. There are signs, however, that the market is beginning to weaken. Prices in Calgary and Edmonton dropped by 8% and 5% respectively. Meanwhile, sales have dropped by over 10% over the past year and the number of new listings has increased by over 11%.
Africa:
Finally, the Knight Frank index reports that average prices in South Africa appreciated by 3.8% over the past year, the lowest rate since the third quarter of 1999. In real terms, prices have been falling since the beginning of the year, caused mainly by double-digit inflation, which has severely restricted affordability. Further price falls are on the horizon.
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