Knight Frank today launches the Global House Price Index for Q4 2014. The index registered a fall in prices in the final quarter of 2014 – its first quarterly decline in over two years. The latest data underlines not only the fragility of the global economic recovery but the extent to which it is filtering through to buyer sentiment.
Report highlights:
• The Global House Price Index, which is weighted according to each country’s GDP, rose by 1.8% in 2014 but slipped by 0.6% in the final quarter of the year. This represents the index’s weakest performance since the third quarter of 2012.
• In 2014, Asia was the second weakest-performing region in the world, with prices rising on average by 3.3%. This is followed by Europe, the weakest-performing world region with prices rising on average by 1.6%.
• In 2014, Hong Kong’s mainstream property market (+12%) outperformed the luxury segment (+1.1%) as buyers target smaller units due to affordability constraints. Following the recent surge in the prices of small to medium-sized residential units, despite the implementation of various property market cooling measures since 2010, the Hong Kong Monetary Authority announced a seventh round of market tightening measures in February 2015. David Ji, Director, Head of Research & Consultancy, Greater China at Knight Frank believes these new measures will affect buying sentiment in the sales market of small to medium-sized homes, in the short-term. However, the policies will only reduce transaction volume and have limited impact on prices, due to strong demand from first-time buyers.
• Five countries recorded double-digit price rises in 2014, Hong Kong amongst them; and Ireland leads the rankings with prices rising 16.3% in 2014.
• Ukraine was the only country to record a double-digit price fall in 2014.
Kate Everett-Allen, International Residential Research at Knight Frank, says, “In 2015, the focus is not just on the extent to which the US market is able to absorb an interest rate rise but the impact on those markets whose currencies are pegged to the dollar.”