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Investment Analysis

Q1 2014: Global house price boom continues

by GLOBAL PROPERTY GUIDE

Jun 11, 2014


The global house price boom continued during the year to Q1 (first quarter) 2014, gathering pace. Despite strongly rising housing markets in Taiwan and the Philippines, the momentum seems to be passing momentarily from Asia, where interventionist authorities have slowed housing markets in Hong Kong, Singapore and China. Instead, action is shifting to the Pacific, the Gulf, and (less forcefully) to Europe, which are all seeing strong price rises.

House prices rose in 31 of the 45 housing markets which have so far published housing statistics, according to a survey of official house price statistics for Q1 2014 by the Global Property Guide, using inflation-adjusted figures. The more upbeat nominal figures, which are more familiar to the public, showed house prices rising in 33 countries, unchanged in one country, and falling in only 11 countries.

Momentum: 30 housing markets showed stronger upward momentum in Q1 2014 than the same period last year, while only 15 housing markets showed weaker momentum.
Inflation-adjusted figures are used throughout.

The global boom continues to accelerate:

  • Dubai has had a spectacular performance over the past two and a half years. Its latest performance was an amazing 31.57% annual house price rise during the past year to Q1 2014. Property demand is surging and the economy remains strong.
  • Pacific housing prices rose impressively. In New Zealand, median house prices rose 8.36% during the year to end-Q1 2014, after year-on-year rises of 8.02% in Q4 2013, 6.4% in Q3, 5.11% in Q2, and 7.19% in Q1. Likewise, Australia's house prices continue to rise rapidly, driven by record low interest rates and strong demand from foreign homebuyers. House prices in the country's eight major cities rose by 8.3% during the year to Q1 2014, its strongest performance since Q2 2010.
  • In the United States, the S&P/Case-Shiller seasonally-adjusted national home price index rose by 5.41% during the year to Q1 2014, down from year-on-year price rises of 9.37% in Q4 2013, 11.96% in Q3, 8.47% in Q2, and 8.25% in Q1.

  • Quarter-on-quarter, the US national home price index dropped slightly by 0.5% in Q1 2014

  • More European housing markets are now booming.  In Ireland, residential property prices rose by 7.49% during the year to Q1 2014, in sharp contrast with the year-on-year decline of 3.49% seen in a year earlier. United Kingdom house prices rose by 7.35% year-on-year in Q1 2014, in sharp contrast to the annual decline of 2.52% the previous year, and the biggest increase since Q3 2007.

  • Baltic prices rose strongly. In Tallinn, Estonia, the average purchase price of dwellings surged 20.04% during the year to Q1 2014, far higher than the 5.59% growth seen in the same period last year. In Vilnius, Lithuania, house prices rose 4.83%, and in Riga, Latvia they rose 4.55%.

    In Iceland, house prices rose strongly by 7.37% during the year to Q1 2014, a sharp improvement from the meagre annual growth of 0.59% in the previous year.

    Strong European housing markets included Turkey, with house prices rising by 7.16% during the year to Q1 2014, Vienna, Austria (6.39%), Sweden (4.86%). Other European housing markets which saw house price rises included Germany, with house prices rising by 3.72% during the year Q1 2014, Czech Republic (2.82%), Switzerland (2.76%), Bulgaria (2.32%), Portugal (1.6%), and Netherlands (0.02%). Except for Turkey and Austria (Vienna), all the above rose more strongly during the year to Q1 2014 compared to the previous year. In addition all, except Germany and Portugal, saw positive quarterly growth during the latest quarter.

    European countries with house price-declines tended to have smaller declines this year than during the same period last year. Though Greece was the world's weakest housing market in our global survey with house prices down 7.08% during the year to Q1 2014, this was its smallest decline since Q3 2011. Spain's house prices dropped 5.41% year-on-year to Q1 2014, but this an improvement from the 12.82% annual decline seen the previous year.

    Other falling European housing markets included Romania with house prices falling 4% during the year to Q1 2014; Kiev, Ukraine (-3.54%), Zagreb, Croatia (-2.88%), Warsaw, Poland (-2.53%), France (-2.22%), Norway (-1.97%), Slovak Republic (-1.44%), and Finland (-1.29%). Again, Romania, Croatia, Poland, and Slovak Republic performed better during the year to Q1 2014 than the previous year.

    The exceptions were Russia, where house prices fell by 5.15% during the year to Q1 2014, worse than the decline of 0.32% the previous year, and Ukraine, France, Norway, and Finland, which also performed more poorly than the previous year.

  • Asian housing markets were mixed.

  • Some Asian housing markets performed strongly.

    In Taiwan, house prices soared by 11.28% during the year to Q1 2014, slightly up from year-on-year increase of 10.17% during the previous year. In the Philippines, the average price of 3-bedroom condominium units in Makati CBD rose by 8.95% in Q1 2014 from a year earlier, a sharp improvement from the annual growth of 2.32% during the same period last year.

    In Shanghai, China, the price index of second-hand residential buildings rose by 8.35% during the year to Q1 2014, a remarkable improvement from the growth of 1.21% during the same period last year. But other signs indicate a slowdown in China's residential property markets.

    Asian housing markets with modest house price increases included Malaysia, with house prices rising by 4.35% during the year to Q1 2014, Thailand (3.64%), Tokyo, Japan (3.32%), Indonesia (1.78%), and South Korea (0.02%).

    Two important markets in Asia, however, performed poorly:

    Hong Kong's house prices are now falling, due to government cooling measures. Residential property prices in Hong Kong dropped 2.27% during the year to Q1 2014, in sharp contrast with the spectacular annual growth of 20.44% in Q1 2013. Hong Kong saw a house price drop of 1.24% quarter-on-quarter in Q1 2014.

    In Q1 2014, the total number of homes sold in HK plummeted by 33.7% from a year earlier, to just 10,788 units, according to the Ratings and Valuation Department (RVD).

    Singapore's housing market continues to decline, amidst modest economic growth. House prices dropped 1.68% during the year to Q1 2014. In Q1 2014, house prices fell by 1.43% from the previous quarter.

    Primary residential sales volumes in Singapore plummeted by 67% year-on-year to 1,791 units in Q1 2014, the lowest level since 2008, according to the Urban Redevelopment Authority. Likewise, resales and sub-sale private homes plunged 57.9% to just 1,010 units over the same period, according to Savills Singapore.

  • South Africa's housing market remains weak. The price index for medium-sized apartments increased 0.89% during the year to Q1 2014, an improvement from the annual declines of 1.34% in Q4 and 2.32% in Q3 2013.
  • Israel's housing market slowed sharply. The average price of owner-occupied dwellings rose by just 1.85% during the year to Q1 2014, a sharp slowdown from an annual rise of 8.21% in Q1 2013. House prices increased by 1.42% during the latest quarter. New dwellings sold dropped 10% from the same period last year, and dwelling start fell 16.1% year-on-year in the first quarter of 2014.

Conclusion: The global house price boom continues to accelerate, with most countries back to their pre-crisis levels. House prices are rising in many more countries than not, and the momentum trend is strongly upwards. In fact, many housing markets are now considered overvalued. Several countries are now imposing housing market cooling measures to avoid a repeat of the past.

Source: Various series, data descriptions and sources here

U.S. house prices continue to rise, albeit at a slower pace

United States house price rises are now decelerating. The S&P/Case-Shiller seasonally-adjusted national home price index rose by 5.41% during the year to Q1 2014, down from year-on-year price rises of 9.37% in Q4, 11.96% in Q3, 8.47% in Q2, and 8.25% in Q1 2013.

Almost all 20 major U.S. cities saw strong house price rises, with Las Vegas registering the biggest year-on-year increase of 19.25% in Q1 2014, followed by San Francisco (19.05%), San Diego (17.06%), Los Angeles (15.05%), Miami (14.36%), Atlanta (13.88%), Detroit (13.87%), Portland (10.01%), Seattle (9.87%), Minneapolis (9.72%), Chicago (9.71%), Phoenix (9.4%) and Tampa (9%). As a reminder, these figures are adjusted for inflation, as are all subsequent figures.

Quarter-on-quarter, the S&P/Case-Shiller seasonally-adjusted national home price index dropped slightly by 0.5% in Q1 2014, after a quarterly decline of 0.07% in Q4 2013, and quarterly increases of 4.24% in Q3, 1.7% in Q2, and 3.24% in Q1 2013.

The FHFA's house price indices registered more moderate year-on-year increases than Case-Shiller, as usual. The FHFA's seasonally-adjusted purchase-only U.S. house price index rose by 5.14% year-on-year in Q1 2014, the lowest annual increase in the past five quarters. FHFA's all-transactions house price index rose by 3.46% year-on-year to Q1 2014, after annual price increases of 3.61% in Q4, 3.05% in Q3, 2.88% in Q2, and 0.59% in Q1 2013.

The total number of new housing units authorized in the U.S. increased by 3.8% year-on-year to April 2014 from the same period last year, to 1,080,000 units, according to the U.S. Census Bureau. The Northeast region saw the biggest increase, with a 12% year-on-rear rise in the number of housing units authorized to 112,000 units in Q1 2014. It was followed by the West (11.3%) and the South (1.7%). Only the Midwest region saw less housing units authorized, registering an annual fall of 4.7%.

The number of U.S. housing completions rose by 8.2% to 132,000 units. In Q1 2014, new privately-owned housing unit starts fell 1.5% year-on-year, to 134,000 units, according to the U.S. Census Bureau. The number of new houses sold in the U.S. dropped 1.8% in Q1 2014 from the same period last year, to 107,000 units, according to the U.S. Census Bureau.

U.S. home builder sentiment stood at 45 in May 2014, down from 46 in the previous month but slightly up from 44 in a year earlier, according to the National Association of Home Builders. A reading of 50 is the midpoint between positive and negative sentiment.

Long-term mortgages are becoming more expensive in the U.S. While the average interest rate for 1-year adjustable rate mortgages (ARMs) was 2.44% in April 2014, slightly down from 2.63% during the same period last year, according to Freddie Mac, the average interest rate for 5-year fixed rate mortgages (FRMs) was 3.07% in April 2014, up from 2.61% a year earlier. Likewise, the average interest rate for 15-year fixed rate mortgages was up to 3.39% from 2.66% in the previous year, while the average rate for 30-year FRMs was 4.34%, up from 3.45% a year earlier.

The U.S. economy grew just 0.1% in the first quarter of 2014, as exports tumbled and businesses accumulated stocks at the slowest pace in nearly a year, according to the U.S. Bureau of Economic Analysis. The U.S. economy is expected to expand by 2.5% this year and by another 3.2% in 2015.

Canada's house price rises continue

House prices in Canada's eleven major cities rose by 2.98% during the year to Q1 2014, the biggest year-on-year increase since Q2 2012, despite the government's continuous implementation of housing market cooling measures. However, house prices dropped by 0.98% in Q1 2014 from the previous quarter.

Calgary saw the highest year-on-year increase of 7.9% in Q1 2014, followed by Vancouver (5.9%), and Toronto (4.2%). Smaller rises were seen in Hamilton (3.6%), Edmonton (3.1%), and Winnipeg (1.8%).

Halifax saw the biggest annual house price fall of 5.8% in Q1 2014, followed by Quebec (-4%), Ottawa (-2.8%), and Montreal (-2.3%).

Canada's house prices are expected to rise by 3.8% this year to an average of CA$397,000 (US$365,676), according to the Canadian Real Estate Association (CREA). In 2014, house prices are expected to rise by 3.9% in Alberta and Ontario, 3.8% in British Columbia, and a meagre 0.9% in Quebec. Houses sold rose by 0.8% in 2013 to 458,200 units, according to CREA.

The Canadian economy is expected to expand by 2.3% in 2014 and another 2.5% in 2015, according to the Bank of Canada (BoC).

The Bank of Canada has kept its key interest rate at 1% since September 2010.

Pacific housing markets saw unprecedented growth

New Zealand is the fifth best performer in our global house price survey. Nationwide median house prices surged 8.36% during the year to end-Q1 2014, after year-on-year rises of 8.02% in Q4, 6.4% in Q3, 5.11% in Q2, and 7.19% in Q1 2013. In Q1 2014, house prices increased by 2.66% from the previous quarter.

Residential building consents surged by 27.5% during the year ended April 2014, according to Statistics New Zealand. Likewise, the total value of dwelling consents soared 28.8%.  Despite this, median-days-to-sale fell by one day, to 34 days in April 2014, compared to a year ago.

However demand continues to fall, mainly due to the central bank restrictions on high loan-to-value ratio (LVR) lending. In April 2014, total dwellings sold were down 20.2% year-on-year to 5,670 units, according to the Real Estate Institute of New Zealand (REINZ).

New Zealand's economy is expected to grow by 3.3% this year, its strongest performance since 2007, according to the International Monetary Fund (IMF), after modest real GDP growth of 2.4% in 2013.

The Reserve Bank of New Zealand raised its official cash rate (OCR) by 25 basis points to 2.75% in March 2014, for the first time in 3 years.

House prices in Australia's eight major cities rose by 8.3% during the year to Q1 2014, its strongest performance since Q2 2010. House prices increased 1.48% quarter-on-quarter in Q1 2014, the sixth consecutive quarter of gains.

Residential construction is surging. In March 2014, dwelling units approved (seasonally-adjusted) soared by 20% from a year earlier, to 15,958 units, according to the Australian Bureau of Statistics (ABS).

The Reserve Bank of Australia (RBA) has kept its cash rate to a record low of 2.5%, after cutting it by 25 basis points in August 2013 to match NZ's OCR.

Australian GDP growth is expected to be 2.6% this year and 2.7% in 2015. The economy grew by 2.4% in 2013, 3.6% in 2012, 2.6% in 2011, and 2.2% in 2010, according to the IMF.

Asian housing markets mixed, but some strong growth

Eight of the eleven Asian markets for which figures are available saw their house prices rise during the year to Q1 2014. Eight performed better during the year to Q1 2014 than the previous year, four worse. The big slowdowns have been in Hong Kong and Singapore.

Taiwan is the third best performer in our global house price survey. House prices soared by 11.28% during the year to Q1 2014, slightly up from 10.17% the previous year. On a quarterly basis, house prices increased by 1.66% in Q1 2014.

Skyrocketing house prices have become a major issue for President Ma Ying-jeou, who plans to collect taxes on property and land combined, in an effort to cool the housing market.

Residential construction activity continues to surge. In March 2014, the number of construction licenses for houses soared by 21% from a year earlier, to reach 9,997 units, according to the Ministry of Interior. Moreover, the total floor area of residential construction permits also rose by 7.7% to about 1.83 million square metres (sq. m.) over the same period.

The Taiwanese economy expanded by 3.04% in Q1 2014 from a year earlier, the strongest since Q4 2012, according to the Directorate General of Budget, Accounting and Statistics (DGBAS). Real GDP growth is expected at 3.1% this year, from 2.1% in 2013, 1.5% in 2012, and 4.2% in 2011.

The Philippines is the fourth best performer in our global house price survey. The average price of 3-bedroom condominium units in Makati CBD surged by 8.95% in Q1 2014 from a year earlier, a sharp improvement from the annual growth of 2.32% during the same period last year. However on a quarterly basis, house prices dropped slightly by 0.12% in Q1 2014.

The Philippine economy grew by 5.7% in Q1 2014 from a year earlier, the slowest pace in two years but the third strongest growth in Asia, based on figures from the the National Statistical Coordination Board (NSCB). The economy is expected to expand by an average of 6.5% this year and in 2015, after spectacular growth of 7.2% in 2013 and 6.8% in 2012, according to the IMF.

China's housing market is patchy. In Shanghai, China, the price index of second-hand residential buildings surged by 8.35% during the year to Q1 2014, a remarkable improvement from the meagre growth of 1.21% over the same period last year.

However on a quarterly basis, house prices in Shanghai fell by 0.49% during the latest quarter. Demand is falling nationwide, also. The total value of homes sold for the first four months of 2014 dropped 9.9% to CNY1.53 trillion (US$248 billion) from the same period last year, according to the National Bureau of Statistics, mainly due to the Chinese government's campaign to tame China's debt boom.

The Chinese economy grew by 7.4% in Q1 2014 from a year earlier, better than market expectations but slightly down from the 7.7% growth seen in the previous quarter.

Several Asian housing markets saw modest house price increases.  In Thailand, property prices rose by 3.64% during the year to Q1 2014, up from a year-on-year increase of 1.49% in the previous year. Likewise, in Tokyo, Japan, house prices rose by 3.32% year-on-year in Q1 2014, slightly better from an annual rise of 3.3% in the previous year. During the latest quarter house prices increased by 0.8% quarter-on-quarter in Thailand and by 2.91% in Tokyo, Japan.

Malaysia's house prices rose by 4.35% year-on-year in Q1 2014, slowing sharply from an annual growth rate of 8.96% in the same period last year and the slowest pace since Q1 2010. House prices increased 0.73% quarter-on-quarter in Q1 2014. The Malaysian economy is expected to expand by a robust 5.2% this year, from an average real GDP growth rate of 5.7% from 2010 to 2013.

Indonesia's housing market also slowed sharply, after recovering in Q4 2012 from a 5-year slump. Residential property prices in the country's 14 largest cities rose by just 1.78% year-on-year in Q1 2014, down from annual increases of 2.93% in Q4 2013, 4.54% in Q3, 6.06% in Q2, and 5.45% in Q1. In Q1 2014, house prices increased by 1.47% from the previous quarter.

In South Korea, house prices increased by a meagre 0.02% during the year to Q1 2014. However, this is a turnaround from the year-on-year drop of 3.44% in the same period last year. Quarter-on-quarter, house prices fell by 0.58% in Q1 2014.

There were residential price falls in three places in Asia:

Hong Kong's house prices are now falling, mainly due to government efforts to cool down the housing market. Residential property prices in Hong Kong dropped 2.27% during the year to Q1 2014, in sharp contrast with the spectacular annual growth of 20.44% in Q1 2013. Hong Kong saw a house price drop of 1.24% quarter-on-quarter in Q1 2014.
Demand is also plunging. In Q1 2014, the total number of homes sold in HK plummeted by 33.7% from a year earlier, to just 10,788 units, according to the Ratings and Valuation Department (RVD).

Hong Kong's economy is projected to expand by 3.7% this year, up from 2.9% in 2013, 1.6% in 2012, and 4.8% in 2011, according to the IMF.

Singapore's housing market continues to decline, amidst modest economic growth. House prices dropped 1.68% during the year to Q1 2014, after an annual drop of 0.9% in Q4 2013, and year-on-year rises of 2.01% in Q3 and 2.47% in Q2. In Q1 2014, house prices fell by 1.43% from the previous quarter.
Primary residential sales volumes plummeted by 67% year-on-year to 1,791 units in Q1 2014, the lowest level since 2008, according to the Urban Redevelopment Authority. The number of resale and sub-sale private homes also plunged by 57.9% to just 1,010 units over the same period, according to Savills Singapore. "Caution rules the game, as sales volumes remain tepid," said Alan Cheong of Savills Research.

The Singaporean economy expanded by 4.9% in Q1 2014 from a year earlier, similar to the country's growth rate in the previous quarter. Real GDP growth is projected at about 3.6% in 2014, from 4.1% in 2013, 1.9% in 2012, and 6% in 2011, according to the IMF.

Vietnam's residential property prices fell slightly by 0.38% year-on-year in Q1 2014, but this was an improvement from the annual drop of 2.91% seen a year ago and the lowest decline since Q2 2010. On a quarterly basis, house prices increased by 1.25% during the latest quarter. The Vietnamese economy is projected to grow 5.6% this year and another 5.7% in 2015.

Dubai house prices skyrocketing, Israel slowing sharply

Dubai, UAE remains the best performer in our global house price survey for the fifth consecutive quarter, with its house prices rising 31.57% during the year to Q1 2014, and 9.58% during the latest quarter.

Property demand is surging. Real estate transactions in Dubai rose by 11% during the year to Q1 2014, compared to the same period last year, according to Dubai Land Department (DLD), while transaction values rose 38% year-on-year to AED61 billion (US$16.6 billion).

Emiratis remain the top investors in Dubai's property market, followed by Indians, Britons, Pakistanis, Saudis, and Qataris.

"We expect the next three quarters to be similarly active," said Sultan Butti Bin Merjen, Director General of DLD, "especially as this period follows the launch of a number of stimulating economic projects in Dubai and the disclosure of some of the preparations for the city's hosting of Expo 2020."

From Q3 2008 to Q3 2011, Dubai saw one of the world's worst housing crashes with house prices plunging by 53%, mainly due to the global financial meltdown. Then in Q2 2012, Dubai's housing market started to recover, thanks to robust economic growth, the availability of finance, the city's status as a safe haven, and an exchange rate pegged to the U.S. dollar. The UAE's economy grew by 4.8% in 2013, after 4.4% in 2012, 3.9% in 2011, and 1.7% in 2010. The IMF growth forecast for 2014 is 4.5%, or more.

In Israel the average price of owner-occupied dwellings rose just 1.85% during the year to Q1 2014, a sharp slowdown from the 8.21% annual rise to Q1 2013. House prices increased by 1.42% during the latest quarter.

Demand is falling. New dwellings sold dropped 10% to 7,261 units in the first four months of 2014, from the same period last year, according to the Central Bureau of Statistics (CBS), while supply of new dwellings for sale rose 8.6% year-on-year to 24,606 units.

Dwelling starts fell 16.1% year-on-year in the first quarter of 2014 to 10,341 units, and dwelling completions fell 2.6% to 9,467 units.

Israel's economy is expected to grow by 3.2% this year and 3.4% in 2015, after average growth of 3.3% the past two years. The Bank of Israel kept its benchmark interest rate at 0.75% in April 2014, after a 25 basis points cut in February 2014.

Europe's recovery

Eight out of the ten weakest housing markets in our global survey were in Europe. But that gives a misleading impression. In fact, previously lagging housing markets in Europe are recovering, while previous strong performers are coming off their peaks. In all, nineteen European markets performed better in Q1 2014 than the previous year, while only seven showed poorer performance.

Ireland's housing market has experienced a strong turnaround, with residential property prices rising by 7.49% during the year to Q1 2014, in sharp contrast with the year-on-year decline of 3.49% the previous year. However on a quarterly basis, house prices were down 2.03% in Q1 2014. The Irish economy is projected to expand by 1.7% this year, from a contraction of 0.3% in 2013.

The UK is Europe's fourth strongest housing market. Nationwide house prices rose by 7.35% year-on-year in Q1 2014, in sharp contrast with an annual decline of 2.52% in the previous year and the biggest increase since Q3 2007. House prices increased 1.95% in Q1 2014 from the previous quarter.

The UK economy is projected to expand by 2.9% this year, up from real GDP growth rates of 1.8% in 2013, 0.25% in 2012, 1.1% in 2011 and 1.7% in 2010.

The Baltics performed well. Estonia is the second best housing market in our global survey. The average price of Tallinn dwellings surged by 20.04% during the year to Q1 2014, far higher than the 5.59% growth last year. Quarter-on-quarter, house prices increased strongly by 6.09% during the latest quarter. Real estate transactions rose by 17% year-on-year to Q1 2014, according to Statistics Estonia, with transaction values up 17.6%.

Estonia's Baltic neighbours in Vilnius, Lithuania (4.83%), and Riga, Latvia (4.55%) also performed well.

Other strong European housing markets include Turkey, with house prices rising by 7.16% during the year to Q1 2014, Vienna, Austria (6.39%), Sweden (4.86%).

All, except Turkey and Austria, showed better performance in Q1 2014 compared to the previous year. All saw positive quarter-on-quarter growth in Q1 2014.

Iceland's house prices rose strongly by 7.37% during the year to Q1 2014, compared to a meagre 0.59% the previous year. Iceland's economic growth is expected at 2.7% this year, from 2.9% in 2013 and 1.4% in 2012.

European housing markets with modest house price rises included Germany, with house prices rising by 3.72% during the year Q1 2014, Czech Republic (2.82%), Switzerland (2.76%), Bulgaria (2.32%), Portugal (1.6%), and Netherlands (0.02%). All these performed better in Q1 2014 compared to a year earlier. In addition all, expect Germany and Portugal, saw positive quarterly growth during the latest quarter.

Depressed European housing markets are doing less badly than before

Even European housing markets which remain depressed, are generally less weak than last year.

For example, Greece is the world's weakest housing market in our global survey. Its house prices fell by 7.08% during the year to Q1 2014. But this was after year-on-year falls of 7.26% in Q4 2013, 9.01% in Q3, 11.25% in Q2, and 11.19% in Q1 - a clear trend towards smaller price-declines. This quarter's figures show the smallest house price decline since Q3 2011.

And on quarterly basis, Greek house prices fell only 0.3% during the latest quarter. True, demand remains weak: residential transactions plummeted this year by 63.3%, according to the Bank of Greece, while their value fell 66.2%.

Another hopeful sign: Greece's economy is likely to grow by 0.6% this year, after six years of contraction, according to the Hellenic Statistical Authority (ELSTAT).

Another example: Spain comes second of the list of the world's worst performers. House prices dropped 5.41% year-on-year in Q1 2014, but this was a big improvement from the 12.82% annual decline seen in the previous year. On a quarterly basis, Spanish house prices increased 0.54% during the latest quarter.

Spain's economy is projected to grow this year by 0.9%, after annual declines of 1.2% in 2013 and 1.6% in 2012.

Other European housing markets which saw house price falls included Romania with house prices falling by 4% during the year to Q1 2014, Kiev, Ukraine (3.54%), Zagreb, Croatia (2.88%), Warsaw, Poland (2.53%), France (2.22%), Norway (1.97%), Slovak Republic (1.44%), and Finland (1.29%).

Notice the trend - weak momentum in previously strong countries (France, Norway, and Finland all performed more poorly than last year), while 'catch-up' countries like Romania, Croatia, Poland, and the Slovak Republic all performed better during the year to Q1 2014 than the previous year.

The exceptions are Russia (and Ukraine). Russian house prices fell by 5.15% during the year to Q1 2014, worse than the decline of 0.32% the previous year. Quarter-on-quarter, Russian house prices dropped 2.86% in Q1 2014.

The Russian economy is projected to grow by only 1.3% this year.

Brazil's housing market is slowing

Brazil's housing market is now slowing gradually, with meagre economic growth and civil unrest. In Sao Paulo, Brazil, house prices rose by 6.71% year-on-year in Q1 2014, the slowest growth in the past six years. On a quarterly basis, house prices in Sao Paulo actually dropped by 0.12% during the latest quarter.

From 2007 to 2013, inflation-adjusted house prices in Sao Paulo had soared by 113% and by 144% in Rio De Janeiro. Brazil's housing boom was mainly propelled by a continuous decline in interest rates. The Banco Central do Brasil's Selic rate fell to 7.25% in 2012, from a high of 26% in 2003. Mortgage interest rates followed the Selic rate down. However starting in the first half 2013, the central bank raised the benchmark interest rate nine times to 11% in April 2014, from 7.25% in April 2013, to rein in inflation.

The Brazilian economy barely grew during the first quarter of 2014, with an annualized GDP growth rate of just 0.8%, due to plunging investments, declining confidence, and uncertainty related to the upcoming elections. In May 2014, industrial confidence fell to its lowest level since 2009, with a number of manufacturers planning shutdowns in Q2 2014, according to the National Industry Confederation. The economy is expected to grow by 1.6% this year, after expanding by 2.3% in 2013, 1% in 2012 and 2.7% in 2011, according to the IMF.

To make things worse, the country is now facing the worst outbreak of civil disorder in almost three decades. Almost a million Brazilians have expressed their frustrations over the US$11 billion government budget spent to host the FIFA World Cup this June 2014, by means of staging street protests and violence. Protesters argue that the money could have been better spent to fix inadequacies in health care, housing, education, and public transport systems.

International Olympic Committee VP John Coates recently commented that the country's preparations for the 2016 Olympics are critically behind schedule and the worst he had seen. The poor quality of water is also a major concern.

Source: Various series, data descriptions and sources here

South Africa's housing market remains weak

The price index for medium-sized apartments increased 0.89% during the year to Q1 2014, in contrast to the annual declines of 1.34% in Q4 and 2.32% in Q3 2013. However on a quarterly basis, house prices dropped by 0.04% during the latest quarter.

House prices in South Africa declined by 15.5% during the global financial crisis from Q4 2007 to Q2 2009. After a short-lived recovery in 2010, house prices dropped again by 7% from Q1 2011 to Q2 2012. Between Q4 2012 and Q2 2013, houses prices increased by 2.2%. However, the housing market remains weak.

The economy is expected to expand by 2.3% this year, after growing by 1.9% in 2013, 2.5% in 2012, and 3.6% in 2011, according to the IMF.

The SABOR (South African Benchmark Overnight Rate) stood at 5.37% in April 30, 2013, up from 4.75% during the same period last year.

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