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Global housing markets


Housing markets were particularly weak in Europe and the United States, the research said.

Few European countries’ markets rose, most fell, and many worse-hit countries such as Ireland, Greece and Spain performed even worse this year than last year. The US figures were also disappointing, because of high unemployment.

Globally, more housing markets experienced price falls than rises. Only 13 out of 39 countries which have so far released data for the period saw house price increases during the year to end Q2 2011. Out of 26 countries with house price falls, 18 saw accelerated rates of decline.

The Global Property Guide said in a media statement that its statistical presentation uses price changes after inflation, "
giving a more realistic picture than the more upbeat nominal figures usually preferred by real estate agents"
.

Asia
Housing markets in some parts of Asia remain strong, despite government measures to cool price-rises, the statement said.

Hong Kong had the highest increase among all countries surveyed by the Global Property Guide, despite cooling measures implemented by the government. House prices were up 19.76 per cent over the year to end Q2 2011, after inflation, with a quarterly rise of 3.51 per cent.

The underlying dynamic has been Hong Kong’s very strong economic growth, with GDP up 5.1 per cent over a year earlier, and very low interest rates resulting from the Hong Kong dollar’s peg to the US dollar.

In Thailand, single-detached houses rose impressively by 7.75 per cent during the year to Q2 2011, after inflation, after last year’s fall of 4.83 per cent.

Thai house prices skyrocketed by 18.29 per cent during the second quarter.

"
This rise probably resulted from the zero interest loan scheme launched by the Government Housing Bank (GHB), aimed at increasing home ownership among lower and middle class earners. However, it should be noted that the Thai house price database is dated and unrepresentative,"
the statement said.

In Taiwan and Singapore, government curbs seem to have been effective, the study found.

House prices in Taiwan rose by only 6.43 per cent over the past 12 months, after a rise of 11.51 per cent the previous year. In Singapore, house prices rose by 5.27 per cent (after a massive rise of 34 per cent the previous year).

House prices in Japan (Tokyo) and China (Shanghai) are both weakening (falling by 0.52 per cent and 4.84 per cent year-on-year, respectively).

Americas
US house prices fell 9.05 per cent after inflation, a 5.93 per cent decline in nominal terms, in the second quarter from a year earlier, the largest decline since 2009, according to the Federal Finance Housing Agency (FHFA).

During the quarter, house prices dropped 2.33 per cent after inflation (a fall of 0.63 per cent in nominal terms).

US home values were pushed down by foreclosures, despite the lowest mortgage interest rates for more than half a century. The homes for sale inventory averaged 3.7 million during the second quarter, the highest since Q3 2010, according to the National Association of Realtors (NAR).

The key factor driving US foreclosures is the continued high unemployment rate. During the second quarter, unemployment in the US stood at 9.1 per cent.

Latin America’s housing markets seem vibrant, but the data is weak, the statement said.

In only a few Latin American countries are house-price statistics published. Brazil had the second largest reported house price rises in the world year-on-year to end Q2 2011. House prices in Brazil have enjoyed double-digit growth over the past two years, according to the FIPE-ZAP price index.

In Sao Paulo, advertised property prices rose by 19.50 per cent during the year to Q2 2011, with a rise of 5.17 per cent during the second quarter of 2011. Factors boosting Brazil’s real estate market include rapidly growing incomes and purchasing power, political and economic stability, an emerging middle class, and a growing population and availability of credit.

"
We would expect other countries where reporting institutions have not yet published their house price data (Argentina and Colombia) to reflect this upward trend when their Q2 figures appear. We also believe house prices have risen in other fast-growing Latin American countries (Peru), where (in contrast) no house price statistics exist,"
the statement said.

In Europe
Prices of houses in Europe generally fell lower during the year to the second quarter of 2011. In fact, most European countries experienced faster rates of decline than last year.

The data can be grouped into several categories: a) faster declines this year than last, b) recoveries last year which have turned into declines, c) continued declines, but not as severe as last year, and d) actual recoveries (a small category).

Several European countries which saw house price falls last year performed even worse this year.

Ireland had the worst house price decline among all reporting countries in the survey over the twelve months to Q2 2011. House prices were down by 14.84 per cent year-on-year, an even worse decline than the 11.83 per cent fall the previous year.

European countries which experienced weaker performances than the previous year include Netherlands (-4.07 per cent), Slovak Republic (-6.49 per cent),Croatia (-6.55 per cent), Spain (-8.43 per cent) and Athens, Greece (-9.88 per cent) (all figures inflation-adjusted).

Some European countries which recovered last year, sunk back this year

In Latvia, standard type apartments in Riga fell by 5.4 per cent year-on-year, after a solid comeback since Q2 2010. Quarter-on-quarter, apartment prices were down by 3.8 per cent.

In the United Kingdom, average house prices were down by 5.33 per cent year-on-year, after rising 6.04 per cent the previous year. The housing market began rebounding as early as Q4 2009, but started falling again in the last quarter of 2010.

"
The price-falls in the UK are interesting, because UK interest rates have been low and sterling has fallen, attracting foreign buyers,"
the statement said.

In Sweden, house prices slid by 1.35 per cent over the year to end Q2 2011, probably due to the 85 per cent mortgage ceiling introduced last year.

In Portugal, house prices have been falling since Q3 2010, and during the year to Q2 2011, prices dropped by 5.67 per cent.

In Germany, apartment prices have been slowing since the first quarter of 2011. During the full year to Q2 2011, prices dipped by 0.65 per cent.

In Finland, house prices rose, but were up a mere 0.18 per cent year-on-year, down from 10.24 per cent growth over the same period last year.

Other European countries which saw price falls last year, have continued to perform poorly this year, but in their case the rate of decline has decelerated.

In Lithuania, apartment prices were down 4.29 per cent over the year to end Q2 2011, a significant improvement than last year’s fall of 15.7 per cent.

In Ukraine, apartment prices in Kyiv were down 8.44 per cent (in nominal terms) over the past 12 months, after plummeting by 17.15 per cent the previous year.

In Russia, prices in the secondary housing market were down 5.25 per cent in the year to Q2 2011, after dropping by 8.06 per cent the previous year.

In Turkey, house prices were down by 1.55 per cent from a year earlier, after last year’s fall of 3.53 per cent.

A few European countries have seen their housing markets recover, the statement said.

Norway led the small group of European countries which experienced house price increases, up by 5.93 per cent over the year to end Q2 2011. Norway’s housing market began to rebound in Q3 2009 and hasnot slowed, driven by low interest rates and strong economic growth (4.8 per cent over a year earlier).

Housing markets in Estonia (Tallinn), France and Iceland rose during the year to end Q2 2011 after suffering house price falls in the previous year. In Tallinn, house prices were up 4.94 per cent year-on-year, after last year’s fall of 0.66 per cent. In France (data is from FNAIM), prices of existing dwellings rose 4.65 per cent year-on-year, after a fall of 1.71 per cent the previous year. In Iceland, house prices rose slightly by 0.60 per cent year-on-year, after plunging by 9.04 per cent during the previous year.

After a decade-long decline during the 1990s, the housing market in Switzerland has been stable since 2000. During the year to Q2 2011, apartment prices rose by 2.19 per cent year-on-year, up from 0.92 per cent the previous year.

Bulgaria
For Bulgaria, the survey found that in terms of house price changes – inflation-adjusted – the year-on-year Q2 2011 result was -10.65 per cent, against -11.16 per cent in Q2 2010. The quarter-on-quarter result for Q2 2011 was -2.27 per cent. In nominal terms, the house price change in Bulgaria for Q2 2011 was -6.41 per cent, against -9.65 per cent in Q2 2010.
The quarter-on-quarter result for Q2 2011, in nominal terms, was -1.59 per cent.

In July, according to Raiffeisen Real Estate, prices of residential property in Bulgaria's capital city Sofia dropped by 10.1 per cent in the second quarter of 2011 compared with the same period of the previous year.

On a quarterly basis, however, housing prices in Sofia increased by 3.6 per cent.

In Plovdiv, Bulgaria's second-largest city, prices of residential properties sold in April-June declined by 2.6 per cent on the year, but edged up 0.2 per cent quarter-on-quarter.

In the Black Sea city of Varna, the country's third-largest, the average housing prices fell by 6.9 per cent against the same period of 2010 and by 1.5 per cent in quarterly terms.

Also in July, the National Statistical Institute said that Bulgaria's residential property prices declined by 6.4 per cent year-on-year in the second quarter of 2011.

In quarterly terms, housing prices decreased by 1.6 per cent in Q2 2011.

Twenty-three regional cities registered quarterly drops in prices, with Veliko Turnovo recording the most significant decline of 5.5 per cent, followed by Gabrovo with 5.4 per cent and Vidin and Plovdiv with 4.7 per cent each.

In Israel
According to the Global Property Guide, Israeli house prices were up 5.4 per cent year-on-year to Q2 2011, but the pace is slowing due to the steps taken by Bank of Israel. These include interest rate hikes (currently 3.25 per cent) and the new limit on prime interest based mortgages (33 per cent of the property’s value).

During the second quarter, Israeli house prices fell by 3.38 per cent, the steepest decline since the last quarter of 2008. Furthermore, the continued increase in the number of building starts, and steps taken by the finance ministry in real estate taxation, are expected to be reflected in house prices in the course of the coming year.

"
House prices are still over-stretched in many countries, and developed world economies are still weak, so price-falls were to be expected,"
says Matthew Montagu-Pollock, publisher of the Global Property Guide.

"
Low interest rates will be positive for housing, but only if the underlying economies recover. And recovery will ultimately bring a sting in the tail, because higher inflation would eventually bring higher nominal interest rates, choking strong upward house price movements,"
Montagu-Pollock said.