- The Knight Frank Global House Price Index rose by 0.1% in the three months to September 2012 and by 1% over a 12 month period
- China and Hong Kong are found to be the second and the third best performing housing markets by quarterly growth
- Brazil recorded the highest annual increase in prices (up 15.2%) but the pace of growth is slowing
- Price growth in Asia Pacific is also slowing, with 4.2% annual growth in the year to September, compared to 7.6% in the previous 12 months
- European countries occupy the bottom twelve rankings in terms of annual price growth
- Greece is positioned at the bottom of the rankings, with a 11.7% decline in prices in the year to September
According to Knight Frank’s latest Global House Price Index report for Q3 2012, house prices around the world have risen on average by just 1% in the last 12 months. However, Europe was the only world region to see prices decline in the last year. In Asia Pacific region, although price growth is slowing, the Hong Kong house price index, with a 14.2% growth in the 12 months to September, is only second to Brazil among 55 mainstream residential markets across the world. Meanwhile, Hong Kong is one of the six markets which recorded double-digit annual price growth in the year to September. The other five markets are Brazil, Turkey, Russia, Colombia and Austria.
Thomas Lam, Director and Head of Research, Greater China at Knight Frank, says in Hong Kong, the government introduced a new Buyer’s Stamp Duty (BSD) as well as extended and intensified the existing Special Stamp Duty (SSD) in October 2012. The policies have dragged down transaction volumes but not prices. Residential prices are set to remain stable in 2013, with mild upward or downward movements of less than 5%. On the Mainland, the central government is expected to continue with its determination to curb the residential property market. However, residential transaction volumes are expected to continue to rebound due to strong end-user demand. We expect home prices in first-tier cities to further growth by less than 5% in 2013, while those in second and third-tier cities could be under downward pressure.
Kate Everett-Allen of International Residential Research at Knight Frank examines the latest data:
Mainstream global property prices stand just 5.2% above the lows hit in the wake of the financial crisis in Q2 2009, according to our latest index. As such, they have underperformed prime global property prices by some margin. Knight Frank’s Prime Global Cities Index shows that prime property values have climbed by 18.7% over the same period.
In Asia, policymakers are offering little hope of an Asian-driven recovery. China’s new leadership looks set to continue with stringent property cooling measures and new lending restrictions in Hong Kong are likely to limit the availability of credit.
Looking to west, with the Eurozone now in its second recession in three years buyer confidence is at an all-time low and it is no coincidence that all the bottom 12 rankings are occupied by European countries this quarter.
The Eurozone’s 17 member states have on average seen prices fall by 1.8% in the 12 months to September, this compares to other world regions such as South America and Asia Pacific which have seen growth of 9.8% and 4.2% respectively.
Greece has now pushed Ireland off the bottom slot – where it has resided for five consecutive quarters – by recording an average price fall of 11.7% in the last year. Ireland, by comparison, has seen its rate of decline improve, up from -14.3% a year ago to -9.6%.
With Europe stagnating, the mounting evidence of a US housing market recovery in recent months led some to believe it could provide the much-needed impetus for the global markets. Prices in the US are now 3.6% higher than in the third quarter of 2011, vacancy rates are at their lowest level since 2005 and housing starts are up 49% year-on-year. However, the US fiscal cliff – the crunch point when tax benefits are due to end and spending cuts commence at the end of 2012 – could extinguish this hope.
In summary, confidence, affordability and debt are constraining Europe. Strict lending and the looming fiscal cliff may dent the early signs of growth in the US while regulatory measures in Asia are keeping housing markets in check. The current period of stagnation looks set to continue well into 2013.
