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Investment Analysis

Q3 2017: Continued strong house price rises in Europe, Canada and parts of Asia, but globally housing markets are slowing sharply

by GLOBAL PROPERTY GUIDE

Jan 02, 2018


During the year to the third quarter of 2017:

  • House prices rose in 24 out of the 46 world's housing markets which have so far published housing statistics, using inflation-adjusted figures.
  • The more upbeat nominal figures, more familiar to the public, showed house price rises in 38 countries, and declines in 8 countries.
  • Upwards price momentum is weakening (see below).

Europe, Canada, Hong Kong, and Macau continue to experience strong price rises. But most of the Middle East, Latin America, New Zealand and some parts of Asia are experiencing either house price falls - or a sharp deceleration of house price rises.

The five strongest housing markets in our global house price survey for the third quarter of 2017 were: Iceland (+18.76%), Hong Kong (+13.14%), Macau (+10.53%), Canada (+9.69%), and Romania (+9.36%).

The biggest y-o-y house-price declines were in Egypt (-8.68%), Kiev, Ukraine (-6.81%), Russia (-6.69%), Mongolia (-5.7%), and Qatar (-2.85%).

Momentum is much weaker.  Only 15 of the world's housing markets for which figures are available showed stronger upward momentum during the year to Q3 2017, while 30 housing markets showed weaker momentum, according to Global Property Guide's research. Momentum is a measure of the "change in the change"; simply put, momentum has increased if a property market has risen faster this year than last (or fallen less). Momentum is weakening in most housing markets covered in our survey.

Inflation-adjusted figures are used throughout this survey. In the case of Kiev, Ukraine, the Global Property Guide adjusts using the official U.S. inflation rate since Ukrainian secondary market dwelling sales are denominated in U.S. dollars.

Source: Various series, data descriptions and sources here

Analysis by continent: Europe's house price boom continues

House prices continue to rise in most of Europe. 15 of our 24 European housing markets have risen. However, only 6 showed stronger upward momentum during the year to Q3 2017, while the 18 markets showed weaker momentum.

Iceland remains the strongest housing market in our global survey. Nationwide house prices surged 18.76% y-o-y in Q3 2017, up from last year's 10.85% and the second highest increase since Q4 2005, due to strong tourism and limited housing supply, especially in Reykjavik. Quarter-on-quarter, house prices increased 3.22% during the latest quarter.

Romania's housing market continues to perform well. The average selling price of apartments rose by 9.36% during the year to Q3 2017, up from 9.02% last year. Romanian house prices increased 3.2% q-o-q during the latest quarter.

Ireland's house prices continue to rise strongly. Residential property prices were up by 7.62% during the year to Q3 2017, up from a y-o-y rise 6.41% to Q3 2016. On a quarterly basis, Irish house prices increased 2.72% in Q3 2017.

Sweden's housing market is now showing signs of slowing, after new amortization requirements introduced in June 2016 to curb speculative demand. The nationwide house price index increased 5.87% during the year to Q3 2017, compared to a rise of 7.41% y-o-y to Q3 2016. House prices increased 1.67% q-o-q during the latest quarter.

The Netherlands' housing market remains strong, with the average purchase price of all dwellings rising by 5.69% during the year to Q3 2017, compared to a rise of 7.09% y-o-y to Q3 2016. On a quarterly basis, house prices rose by 2.17% in Q3 2017.

Other strong European housing markets included Montenegro, with house prices rising by 5.07% during the year to Q3 2017, followed by Slovak Republic (4.8%), Germany (4.25%), Portugal  (4.04%), and Riga, Latvia (2.58%). All saw positive quarterly growth during the latest quarter. However, only Montenegro and Portugal had bigger price increases during the year to Q3 2017 than a year earlier.

European housing markets with smaller house price rises included Spain with house prices rising by 1.42% y-o-y in Q3 2017, Switzerland (1.4%), Vienna, Austria (1.28%), Norway (0.96%), and Finland (0.36%). House prices in Tallinn, Estonia were unchanged over the same period. All, except Norway, recorded positive quarterly growth during the latest quarter. All had weaker performances during the year to Q3 2017 compared to a year earlier.

Europe's weakest housing markets. Ukraine's housing market remains depressed, even though the conflict with Russia officially ended in 2015 and the economy has begun to recover. House prices in Kiev fell by 6.89% during the year to Q3 2017, worse than the previous year's 2.93% decline. It was the sixteenth consecutive quarter of house price falls. House prices fell by 2.51% quarter-on-quarter in Q3 2017.

Russia remains the second weakest housing market in Europe and the third worst performer in our global survey. Nationwide residential property prices fell by 6.69% y-o-y to Q3 2017 and by 1.07% during the latest quarter.

Macedonia's housing market remains weak, due in part to the country's extended political crisis, and the impact from problems in neighboring Greece. The nationwide average price of dwellings fell by 2.78% during the year to Q3 2017. On a quarterly basis, house prices rose 1.87% during the latest quarter.

European housing markets with minimal house price falls included Greece, with house prices falling by 1.62% during the year to Q3 2017, Jersey (-0.64%), Vilnius, Lithuania (-0.2%), the UK  (-0.08%), and Turkey (-0.05%). All saw positive latest-quarter price changes (1.18% for Greece, 0.14% for Jersey, 0.54% for Lithuania, 0.32% for the UK, and 0.75% for Turkey). All, except Greece, performed worse y-o-y to Q3 2017 than a year earlier.

Asia: Hong Kong, Macau and the Philippines are among the best performers in our global house price survey

Hong Kong was the world's second strongest housing market during the year to Q3 2017, despite higher stamp duties for non-first time homebuyers. Macau's house prices are surging, amidst massive infrastructure investments that will transform its connections to China and Hong Kong. The Philippines also had strong price rises, continuing the pattern of the past six years, amidst strong economic growth. Japan is also stable with more modest house price rises.

Hong Kong's residential property prices surged 13.14% during the year to Q3 2017, in contrast with the y-o-y decline of 5.67% during the same period last year. Quarter-on-quarter, house prices increased 0.87% in Q3 2017.

Macau's average residential unit prices surged 10.53% during the year to Q3 2017, after last year's 3.49% y-o-y rise. Surprisingly, house prices fell by 5.01% during the latest quarter.

The Philippines' housing market remains robust. The average price of 3-bedroom condominium units in Makati CBD rose by 6.58% during the year to Q3 2017, compared to 7.56% y-o-y to Q3 2016. House prices increased 0.17% during the latest quarter. Makati CBD property prices have soared more than 49% from Q1 2011 to Q4 2016, amidst rapid economic growth.

In Japan, the average price of existing condominiums in Tokyo rose by 2.56% during the year to Q3 2017, after a y-o-y rise of 6.56% in Q3 2016. Residential property prices in Tokyo rose 1.83% during the latest quarter.

Other Asian housing markets have lost steam. House prices fell in seven of the eleven Asian markets for which figures were available during Q3 2017.

Mongolia's housing market remains depressed, amidst a sharp economic slowdown and the ongoing sovereign debt crisis. Nationwide, house prices dropped 5.7% during the year to Q3 2017, after a fall of 7.92% y-o-y in Q3 2016. House prices fell 0.99% during the latest quarter.

Singapore's housing prices fell by 0.52% during the year to Q3 2017, an improvement from a 2.89% y-o-y decline during the same period last year and the smallest decline since Q4 2013. It was the sixteenth consecutive quarter of house price falls. House prices increased 0.73% q-o-q during the latest quarter.

Thailand's property market continues to lose steam. Nationwide house prices fell slightly by 0.62% during the year to Q3 2017, in contrast to a y-o-y rise of 1.01% in the previous year. House prices increased 0.98% q-o-q in Q3 2017.

South Korea's housing market is also fragile, with the nationwide housing purchase price index falling by 0.62% y-o-y in Q3 2017, its fifth consecutive quarter of minimal house price falls. House prices dropped 0.12% q-o-q during the latest quarter.

Taiwan's nationwide house prices fell by 0.51% during the year to Q3 2017, after rising 2.95% y-o-y to Q3 2016. Quarter-on-quarter, house prices fell by 1.6% in Q3 2017.

Indonesia's housing market remains sluggish. Residential prices in the country's 14 largest cities fell by 0.47% during the year to Q3 2017, the eleventh consecutive quarter of y-o-y declines. House prices fell by 0.3% q-o-q during the latest quarter.

In China, the housing market is now slowing sharply, as new regulatory and monetary tightening policies are impacting developers and speculative buyers. In Beijing, the price index of second-hand houses fell by 0.31% during the year to Q3 2017, in sharp contrast a rise of 37.87% y-o-y to Q3 2016. During the latest quarter, house prices in Beijing fell 3.22%.

U.S. house price rises remain steady, Canada's house price boom continues

The pace of price-rises in the U.S. housing market remains steady amidst bullish homebuilder sentiment. Canada meanwhile is in the middle of a house price boom.

The S&P/Case-Shiller seasonally-adjusted national home price index rose by 3.83% during the year to Q3 2017 (inflation-adjusted), slightly up from a rise of 3.61% y-o-y in Q3 2016. House prices increased 0.74% during the latest quarter. The Federal Housing Finance Agency's seasonally-adjusted purchase-only U.S. house price index rose by 4.48% y-o-y in Q3 2017 (inflation-adjusted), down from 5.08% y-o-y to Q3 2016. The index increased 0.97% q-o-q in Q3 2017.

In Canada's eleven major cities house prices surged by 9.69% during the year to Q3 2017, down from a rise of 10.18% y-o-y in Q3 2016. House prices increased 1.46% q-o-q in Q3 2017.

Latin America's housing markets mixed

Chile:  The average price of new apartments in Greater Santiago rose by 3.43% during the year to Q3 2017, up from a rise of 1.46% y-o-y in Q3 2016. On a quarterly basis, house prices increased 1.75% in Q3 2017.

Brazil: In Sao Paulo, house prices fell by 1.13% during the year to Q3 2017, after last year's 7.71% annual growth. Quarter-on-quarter, house prices fell slightly by 0.2% in Q3 2017.

Mexico's housing market is cooling sharply. The nationwide house price index fell by 1.42% during the year to Q3 2017, in stark contrast with a y-o-y rise of 3.84% in the previous year. It was the first quarter of y-o-y decline since Q2 2014. On a quarterly basis, house prices dropped 0.63% in Q3 2017.

Middle Eastern housing markets have lost steam

The Middle East's housing markets have lost steam with three of the six weakest housing markets in our global house price survey in the region: Egypt, Qatar and UAE.

Egypt was the weakest housing market in our global survey, with the nationwide real estate index falling by 8.68% during the year to Q3 2017, worse than the previous year's 1.24% y-o-y decline. Surprisingly, house prices increased 7.65% during the latest quarter.

Qatar's housing market is showing signs of improvement, despite a sharp economic slowdown and the ongoing diplomatic crisis. The nationwide real estate price index dropped 2.85% during the year to Q3 2017, a sharp improvement from last year's 14.09% y-o-y fall. Property prices fell 8.98% q-o-q during the latest quarter.

Dubai's residential property prices fell 2.84% during the year to Q3 2017, after an annual decline of 3.91% y-o-y in Q3 2016. It was the eleventh consecutive quarter of y-o-y house price falls. House prices fell 0.97% during the latest quarter.

Israel's decade-long house price boom could now be over, as government cooling measures intensify. The nationwide average price of owner-occupied dwellings increased by a miniscule 0.67% y-o-y in Q3 2017, a decline from the previous year's 5.8% growth. House prices rose by 0.69% q-o-q in Q3 2017.

New Zealand slowing sharply

New Zealand's housing market is now slowing sharply, mainly due to the introduction of new lending restrictions in October last year and worsening affordability. The nationwide median house prices rose by a meagre 0.04% during the year to Q3 2017, a sharp slowdown from y-o-y growth of 5.85% in the previous year and the lowest growth since Q1 2012. House prices dropped 1.24% q-o-q during Q3 2017.

Puerto Rico remains depressed

Puerto Rico's seasonally-adjusted purchase-only house price index (inflation-adjusted) dropped 0.35% during the year to Q3 2017, after a y-o-y decline of 4.4% in Q4 2016. House prices increased 6.17% q-o-q in Q3 2017.

 

Source: Various series, data descriptions and sources here

Detailed country-by-country analysis: Europe

Six of the ten strongest housing markets in our global survey are in Europe, and house prices have risen in 15 of the 24 European housing markets for which figures were available during the year to Q3 2017.

However, only 6 European housing markets showed stronger upward momentum during Q3 2017, while the 18 markets showed weaker momentum.

Iceland remains the strongest market in our global survey, despite slowing economic growth. Nationwide house prices surged 18.76% y-o-y in Q3 2017, sharply up from last year's 10.85% growth. Quarter-on-quarter, house prices increased 3.22% during the latest quarter.

Iceland saw a housing boom from 2002 to 2007, with house prices surging by more than 73%. However house prices plunged by 32.5% from early-2008 to 2010, due to Iceland's extreme exposure to the global crisis. The housing market was quiet during the next three years, with house prices rising a meagre 5%. Iceland then saw strong house price rises of 5.18% in 2014, 6.93% in 2015, and 12.53% during 2016, attributed to strong demand coupled with limited housing supply, especially in the capital city of Reykjavik.

In Q3 2017, Iceland's economy grew by just 3.1% from a year earlier, the weakest growth in two years as stronger krona weighed on exports. Economic growth is projected to slow to 3.7% this year, sharply down from the previous year's 7.2% growth, according to the Central Bank of Iceland.

Romania's housing market continues to perform well, amidst strong economic growth. The average selling price of apartments rose strongly by 9.36% during the year to Q3 2017, a slight improvement from a y-o-y rise of 9.02% in the same period last year. Romanian house prices increased 3.2% q-o-q during the latest quarter.

Romania's strong performance over the past two years is a rebound from previous dramatic falls. House prices plunged by 24.22% in 2009, 22.08% in 2010, 6.99% in 2011, 5.96% in 2012, 10.43% in 2013, and 1.59% in 2014. It was only in 2015 that the housing market began to recover, thanks to economic growth and a recovery in the construction sector. House prices surged by 7.74% in 2015 and by another 11.01% in 2016.

The Romanian economy grew by 4.8% in 2016, up from 3.9% growth in 2015, and almost zero growth between 2009 and 2014. Romania's economy is expected to grow by a robust 5.5% this year and by 4.4% in 2018, according to the IMF.

Ireland is considered by some to be Europe's austerity star performer, having introduced structural reforms early in the crisis and is, according to this narrative, now reaping the benefits. Residential property prices were up by 7.62% during the year to Q3 2017, after y-o-y rises of 10.08% in Q2 2017, 8.04% in Q1 2017, 6% in Q4 2016, and 6.41% in Q3 2016. On a quarterly basis, Irish house prices increased 2.72% in Q3 2017.

The Irish economy grew by a healthy 5.2% last year, after GDP growth of 26.3% in 2015 (obviously a statistical artefact), 8.5% in 2014, and 1.1% in 2013. Despite uncertainties related to Brexit and future US tax and trade policies, the economy is expected to remain firm this year with a projected GDP growth of 4.8%, more than twice the EU average of 2.2%, according to the European Commission.

Sweden's housing market is now showing signs of slowdown, amidst the introduction of new amortization requirements in June 2016 to curb speculative demand. The nationwide house price index increased 5.87% during the year to Q3 2017, from y-o-y rises of 7.36% in Q2 2o17, 6.59% in Q1 2017, 4.74% in Q4 2016 and 7.41% in Q3 2016. House prices increased 1.67% q-o-q during the latest quarter.

Demand is now falling. The number of home purchases fell by 7.3% to 38,517 units during the first three quarters of 2017 from a year earlier, according to Statistics Sweden. Home sales fell by 6.19% in 2016, after rising by 5.93% in 2015, 6.71% in 2014 and 3.83% in 2013. Dwelling starts in newly constructed one- or two-dwelling buildings increased 1.5% y-o-y in the first three quarters of 2017 while completions rose strongly by 12.6%.

The Swedish economy is expected to grow by 3.2% this year and by 2.7% next year, a slowdown from annual growth rates of 3.3% in 2016 and 4.1% in 2015, according to the European Commission.

The Netherlands' housing market remains strong, with the average purchase price of all dwellings rising by 5.69% during the year to Q3 2017, from y-o-y rises of 7.44% in Q2 2017, 7.11% in Q1 2017, 4.37% in Q4 2016 and 7.09% in Q3 2016. On a quarterly basis, house prices rose by 2.17% in Q3 2017.

Demand continues to increase. During the first three quarters of 2017, there were 175,672 houses sold, up by 14.1% as compared to the same period last year, according to Statistics Netherlands (CBS). The Dutch economy is expected to expand by 3.2% this year and by another 2.7% in 2018, after growing by 2.2% in 2016, 2% in 2015 and 1.4% in 2014, according to the European Commission.

Other strong European housing markets included Montenegro, with house prices rising by 5.07% during the year to Q3 2017, followed by Slovak Republic (4.8%), Germany (4.25%), Portugal (4.04%), and Riga, Latvia (2.58%). All saw positive quarterly growth during the latest quarter. However, only Montenegro and Portugal saw bigger price increases in Q3 2017 compared to a year earlier.

European housing markets with smaller house price rises included Spain with house prices rising by 1.42% y-o-y in Q3 2017, Switzerland (1.4%), Vienna, Austria (1.28%), Norway (0.96%), and Finland (0.36%). House prices in Tallinn, Estonia were unchanged over the same period. All, except Norway, recorded positive quarterly growth during the latest quarter. Though all showed weaker performances in Q3 2017 compared to a year earlier.

Some European housing markets continue to struggle

Ukraine's housing market remains depressed, even though the conflict with Russia officially ended in 2015 and the economy has already recovered. House prices in Kiev fell by 6.89% during the year to Q3 2017, worse than the previous year's 2.93% decline. It was the sixteenth consecutive quarter of house price falls. House prices fell by 2.51% quarter-on-quarter in Q3 2017.

Ukraine's economy grew by 2.3% last year, after declines of 9.8% in 2015, 6.6% in 2014 and 0.03% in 2013. The economy is expected to expand by 2% this year and by another 3.2% in 2018, according to the IMF.

Russia remains the second weakest housing market in Europe and the third worst performer in our global survey - but things are getting better. Nationwide residential property prices plunged by 6.69% y-o-y in Q3 2017, the smallest decline since Q4 2014. Russia's house prices fell by 1.07% during the latest quarter.

After a period of soaring consumer prices, inflation in Russia has somewhat stabilized, thanks to prudent monetary policies. In November 2017, headline inflation slowed to 2.5%, the lowest reading in the post-USSR era, according to the Federal State Statistics Service, a significant decline from 15.5% in 2015. Inflation is expected to average about 4.2% this year and 3.9% next year.

From the perspective of foreigners the decline in the value of Russian property has been greater. The ruble has lost almost 61% of its value against the US dollar in just three years, from an exchange rate of RUB30.231= US$1 in January 2013, to RUB77.175 in January 2016. However over the past 21 months, the ruble recovered almost 31% to reach RUB58.946 = USD1 in November 2017.

Russia's economy is expected to expand by 1.8% this year, after contracting 0.2% in 2016, 2.8% in 2015, and growing 0.7% in 2014. In October 2017, crude oil prices stood at US$57.51 per barrel, 49% down from US$111.8 per barrel in June 2014.

Macedonia's housing market remains weak, due in part to the country's extended political crisis, and the impact from problems in neighboring Greece. The nationwide average price of dwellings fell by 2.78% during the year to Q3 2017, its fifth consecutive quarter of annual price falls. On a quarterly basis, house prices increased 1.87% during the latest quarter.

Since the global crisis Macedonia's housing market has never truly recovered. House prices fell by 3.6% in 2011, 3.1% in 2012, and 1.74% in 2013. House prices increased slightly by 1.19% in 2014 and 0.71% in 2015, but fell again by 0.91% in 2016.

Macedonia's economy expanded 2.4% in 2016, 3.8% in 2015, 3.6% in 2014, and 2.9% in 2013. Economic growth is projected to be 2.5% this year and 3.2% in 2018, according to the IMF.

European housing markets with minimal house price falls included Greece, with house prices falling by 1.62% during the year to Q3 2017, Jersey (-0.64%), Vilnius, Lithuania (-0.2%), the UK (-0.08%), and Turkey (-0.05%). All saw positive quarterly price changes (1.18% for Greece, 0.14% for Jersey, 0.54% for Lithuania, 0.32% for the UK, and 0.75% for Turkey). All, except Greece, performed worse in Q3 2017 compared to a year earlier.

Detailed country-by-country analysis: Asia

Asian housing markets are two-tiered, with Hong Kong, Macau and the Philippines' property markets rising strongly.

Hong Kong's housing market is the second best performer in our global house price survey, with residential property prices surging by 13.14% during the year to Q3 2017, in sharp contrast with the y-o-y decline of 5.67% during the same period last year. Quarter-on-quarter, house prices increased 0.87% in Q3 2017.

The latest house price rises come despite the government raising stamp duties for all non-first time homebuyers starting November 2016.

Demand is surging. The number of property transactions rose 13.8% to 50,560 units during the first ten months of 2017, while values surged 35.1% to HK$450.6 billion (US$57.73 billion), according to the Ratings and Valuation Department (RVD). Housing demand has been propelled by stringent government regulations on development, low interest rates, and currency stability; while the supply of land, which the government controls, continues to diminish.

Hong Kong's economy grew by 3.6% in Q3 2017 from a year earlier, up from growth rates of 1.9% in 2016, 2.4% in 2015, 2.8% in 2014, 3.1% in 2013, and 1.7% in 2012.

Macau's housing market is performing well amidst massive infrastructure investments, which will transform Macau's connections to China and Hong Kong. The average transaction price of residential units surged 10.53% during the year to Q3 2017, up from last year's 3.49% y-o-y rise. Surprisingly, house prices fell by 5.01% during the latest quarter.

After an amazing growth of almost 17% per year from 2010 to 2013, Macau's economy contracted by 1.2% in 2014, by a huge 21.5% in 2015, and by another 2.1% in 2016, after Macau's main industry - gaming activities - took a major hit from China's anti-corruption campaign.

Macau's economy is expected to rebound this year, with projected average growth of 7.8% per year in 2017 and 2018, fuelled by strong gaming revenues and massive infrastructure projects, according to the Economist Intelligence Unit.

The Philippines' housing market remains robust. The average price of 3-bedroom condominium units in Makati CBD rose by 6.58% during the year to Q3 2017, compared to a price rise of 7.56% y-o-y in Q3 2016. Housing prices increased 0.17% during the latest quarter. Makati CBD property prices have soared more than 49% from Q1 2011 to Q4 2016, amidst rapid economic growth.

The Philippine economy is in its 6th year of strong growth, growing by 6.9% y-o-y in Q3 2017, after expanding by 7% y-o-y in Q3 2016, according to the Philippine Statistics Authority. The economy is projected to expand between 6.5% and 7.5% this year, up from 6.8% in 2016, 5.9% in 2015, 6.2% in 2014, 7.1% in 2013, and 6.7% in 2012, based on government estimates.

In Japan, the average price of existing condominiums in Tokyo rose by 2.56% during the year to Q3 2017, compared to 6.56% y-o-y in Q3 2016. Residential property prices in the capital city increased by 1.83% during the latest quarter.

Demand is mixed. Existing condominium sales in Tokyo rose by 1.6% y-o-y to 28,467 units in the first three quarters of 2017, according to The Land Institute of Japan. On the other hand, sales of existing detached houses in Tokyo fell by 1.5% to 14,039 units over the same period. The world's third largest economy is expected to grow by 1.9% for fiscal year 2017, an improvement from y-o-y growth rates of 1% in 2016, 1.1% in 2015, and 0.3% in 2014, according to the Bank of Japan.

From a US$-based investor's perspective, the Japanese residential market's gains have been bolstered by the 9.7% appreciation of the Japanese Yen from ¥123.725 = US$1 in June 2015, to ¥112.75 = US$1 in November 2017. However, this was not enough to offset the 37% drop in the value of yen against the dollar from 2012 to 2015.

Most Asian housing markets saw modest house price falls.

House prices fell in seven of the eleven Asian markets for which figures were available during Q3 2017.

Mongolia's housing market remains depressed, amidst a sharp economic slowdown and a sovereign debt crisis. Nationwide, house prices dropped 5.7% during the year to Q3 2017, after falling 7.92% y-o-y to Q3 2016. House prices fell 0.99% during the latest quarter.

Mongolia's economy grew by just 1% in 2016, sharply down from GDP growth of 2.4% in 2015, 7.9% in 2014, 11.6% in 2013, 12.3% in 2012, 17.3% in 2011, and 7.3% in 2010. Government debt increased to a record 79.4% of GDP in 2016, from 77.4% in 2015 and 54.7% in 2014. The economy is projected to expand by 2% this year and 2.5% in 2018, according to the IMF.

Thailand's property market continues to lose steam. Nationwide house prices fell slightly by 0.62% during the year to Q3 2017, in contrast to a y-o-y rise of 1.01% in the previous year. House prices increased 0.98% q-o-q in Q3 2017.

Thailand's economy expanded by 4.3% y-o-y in Q3 2017, up from a 3.8% growth during the previous quarter and the fastest pace in more than four years, mainly buoyed by strong exports and rising personal spending. Economic growth is projected at 3.9% this year, according to the National Economic and Social Development Board.

South Korea's housing market is also fragile, with the nationwide housing purchase price index falling by 0.62% y-o-y in Q3 2017, the fifth consecutive quarter of house price falls. House prices dropped 0.12% q-o-q during the latest quarter.

Korea's economy economy is expected to expand by 3% this year, according to the Bank of Korea, slightly up from an annual growth rate of 2.8% in both 2014 and 2015, amidst robust exports and improving jobs market.

Singapore's housing market is improving, amidst strong economic growth. House prices fell slightly by 0.52% during the year to Q3 2017, but this was the smallest decline since Q4 2013. It was the sixteenth consecutive quarter of house price falls. House prices increased 0.73% q-o-q during the latest quarter.

Demand is now rising strongly. Sales of new private residential units increased 34.4% in Q3 2017 from a year earlier, to 2,663 units, according to the Urban Redevelopment Authority. Meanwhile launches of private residential units fell by 26.5% y-o-y to 1,183 units over the same period.

Singapore's economy expanded by 5.2% in Q3 2017 from a year earlier, up from the previous quarter's 2.9% growth and the best showing since Q4 2013. The economy is expected to grow by 3% to 3.5% this year, on the back of strong manufacturing, according to the Ministry of Trade and Industry.

Taiwan's housing market is still weak. Nationwide house prices fell by 0.51% during the year to Q3 2017, compared to a rise of 2.95% y-o-y in Q3 2016. Quarter-on-quarter, house prices fell by 1.6% in Q3 2017. House prices have fallen over the past two years, after dramatic government measures to curb speculative house purchases.

Taiwan's economy grew by 3.11% y-o-y in Q3 2017, following growth of 2.13% in Q2 2017 and 2.6% in Q1 2017, fuelled by a surge in tech exports, according to the Directorate-General of Budget, Accounting and Statistics (DGBAS). The economy is expected to expand by 2.15% this year, after GDP growth rates of 1.5% 2016, 0.65% in 2015, 3.9% in 2014, and 2.2% in 2013.

Indonesia's housing market remains sluggish, despite a booming economy. Residential prices in the country's 14 largest cities fell by 0.47% during the year to Q3 2017, the eleventh consecutive quarter of y-o-y declines. House prices fell by 0.3% q-o-q during the latest quarter.

Demand continues to weaken sharply and total supply growth is expected to slow in the coming years. Yet Indonesia's economy is expected to grow by 5.2% this year and another 5.3% next year, after expanding 5% in 2016, 4.9% in 2015, 5% in 2014, 5.6% in 2013, and 6% in 2012, according to the IMF.

China's housing market is now slowing sharply, impacted by regulatory and monetary tightening policies. In Beijing, the price index of second-hand houses fell by 0.31% during the year to Q3 2017, in sharp contrast with y-o-y rises of 13.92% in Q2 2017, 25.73% in Q1 2017, 34.06% in Q4 2016, and 37.87% in Q3 2016. During the latest quarter, house prices in Beijing dropped 3.22%.

After surging by more than 36% in 2016, the value of new homes sold nationally fell by 1.7% in October 2017 from a year earlier, the first month of y-o-y decline since March 2015, according to the National Bureau of Statistics. New housing starts, an indicator of developers' confidence in the housing market, fell by 4.3% y-o-y nationally in October 2017, after an 8.1% annual gain in 2016. To cool the housing market, in September 2016 the government raised the minimum downpayment threshold for non-locals, and stopped property companies issuing domestic bonds. Since then, a series of other tightening measures were introduced in more than 45 Chinese cities, mostly top-tier cities, to curb speculative buying.

The Chinese economy grew by 6.7% during 2016, its slowest growth for 26 years, despite a string of government stimulus measures to shore up demand. The economy expanded by an annualized rate of 6.8% in Q3 2017, at par with the previous two quarters' 6.9% growth and well above the government's GDP growth target of 6.5% this year. The central bank kept its benchmark one-year lending rate at 4.35% in November 2017, after cutting it five times in 2015.

Detailed country-by-country analysis: Americas


U.S. house prices continue to rise, sentiment remains bullish

The S&P/Case-Shiller seasonally-adjusted national home price index rose by 3.83% during the year to Q3 2017 (inflation-adjusted), slightly up from a rise of 3.61% y-o-y in Q3 2016. House prices increased 0.74% during the latest quarter.

The Federal Housing Finance Agency's seasonally-adjusted purchase-only U.S. house price index rose by 4.48% y-o-y in Q3 2017 (inflation-adjusted), after rising 5.08% y-o-y in Q3 2016. The index increased 0.97% q-o-q in Q3 2017.

House prices continue to rise in all 20 major U.S. cities, according to the Case-Shiller index. Seattle had the biggest inflation-adjusted increase of 10.5% during the year to Q3 2017, followed by Las Vegas (6.63%), San Diego (5.85%), Portland (5.01%), Boston (4.95%), Tampa (4.93%), Denver (4.86%), Dallas (4.84%), San Francisco (4.78%) and Detroit (4.73%).

Washington and Chicago saw the lowest growth in inflation-adjusted house prices at 0.93% and 1.73%, respectively.

In Q3 2017, the U.S. economy grew by an annual rate of 3.3%, the strongest pace in three years, thanks to robust business investment, as well as a rebound in government spending. The U.S. economy grew by just 1.6% in 2016, its slowest growth since 2011, according to the U.S. Department of Commerce. The U.S. is expected to expand by 2.2% this year.

Demand is rising strongly. New house sales were up by 18.7% y-o-y in October 2017, according to the U.S. Census Bureau.

U.S. homebuilders remain bullish, reflecting the rebound in sales of newly built homes. U.S. homebuilder sentiment stood at 70 in November 2017, up from 68 the previous month and 63 in the same period last year, according to the National Association of Home Builders (NAHB). A reading of 50 is the midpoint between positive and negative sentiments.

New privately-owned housing units authorized rose slightly by 0.9% y-o-y in October 2017, according to the U.S. Census Bureau. Housing starts fell by 2.9%, while completions rose strongly, by 15.5%.

"Ongoing job creation, rising incomes and attractive mortgage rates are supporting demand in the single-family housing sector. This will help keep housing on a steady, upward glide path in the months ahead," said NAHB's chief economist Robert Dietz.

Canada is in the midst of a house price boom

Canada's house prices continue to accelerate, despite repeated market-cooling measures. House prices in Canada's eleven major cities surged by 9.69% during the year to Q3 2017, after a rise of 10.18% y-o-y in Q3 2016. House prices increased 1.46% q-o-q in Q3 2017.

Hamilton saw the biggest inflation-adjusted house price increases of 17.65% y-o-y in Q3 2017, followed by Toronto (16.24%), Victoria (12.97%), and Vancouver (8.86%). Modest to minimal house price rises were recorded in Ottawa (3.56%), Montreal (3.43%), and Calgary (1.02%).

In contrast, minimal house price falls were seen in Halifax (-1.18%), Quebec (-0.45%), Winnipeg (-0.35%), and Edmonton (-0.13%).

Home sales fell by 4.3% in October 2017 from a year earlier, according to the Canadian Real Estate Association (CREA), with declines in slightly more than half of all local markets, led overwhelmingly by the Greater Toronto Area and nearby markets. There were about 5 months of inventory on a national basis in October 2017, unchanged from the previous two months.

The Bank of Canada held its key interest rate unchanged at 1% in December 2017, after raising it twice this year, amidst encouraging job and wage growth, as well as strong personal consumption and business investment. The economy is expected to grow by 3% this year, after expanding by 1.4% in 2016, 0.9% in 2015, 2.6% in 2014, 2.5% in 2013, and 1.7% in 2012.

South America is mixed

Chile's housing market is strengthening, despite the introduction of a property sales tax last year. The average price of new apartments in Greater Santiago rose by 3.43% during the year to Q3 2017, up from the previous year's 1.46% y-o-y rise. On a quarterly basis, house prices increased 1.75% in Q3 2017.

In 2016, VAT of 19% was imposed on sales of properties by "habitual sellers" such as real estate companies, and on legal or natural persons who purchase and sell their properties in a span of less than one year.

Chile's economy grew by about 1.6% in 2016, the lowest growth since 2009 when the economy contracted by 1.6%, according to the IMF. The economy is expected to expand by 1.4% this year and by 2.5% in 2018.

Brazil's house prices continue to fall, albeit at a slower pace, amidst gradually improving economic conditions. In Sao Paulo, house prices fell by just 1.13% during the year to Q3 2017, a sharp improvement from last year's 7.71% annual growth. Quarter-on-quarter, house prices fell slightly by 0.2% in Q3 2017.

House prices in Sao Paulo soared by 113% (inflation-adjusted) from 2007 to 2013, while Rio De Janeiro's rose by 144%.

The crisis started in the first half 2013 when the central bank raised the benchmark interest rate nine times to 11% in April 2014, causing a sharp economic slowdown. By late 2015 rates were 14.25%. Then rates began to be cut and in December 2017 reached an all-time low of 7%.

Brazil has experienced its worst and longest recession in more than a century. The economy shrank by 3.6% in 2016, following a contraction of 3.8% in 2015 and meagre growth of 0.5% in 2014, according to the IMF. The economy is expected to grow by 0.7% this year and by 1.5% in 2018.

Meanwhile the currency plunged. The Brazilian Real (BRL) lost more than 41% against the U.S. dollar from January 2014 to January 2016, reaching an average monthly exchange rate of BRL4.0553= USD1 as compared to BR2.3837 = USD1. However in the past 22 months, the real has recovered by about 24.4% to reach an exchange rate of BRL3.26 = USD1 in November 2017.

The country continues to face political turmoil. Over the past year, President Dilma Rousseff has been impeached following the massive Petrobras corruption scandal, the speaker of the house has been jailed, and five Cabinet ministers have been removed or allowed to step down because of allegations of corruption. Brazil's new president, Michel Temer, is also embroiled in a corruption scandal, accused of exerting pressure to assist a top political ally in a property deal. Worse, the chances that the government will pass controversial bills and implement social security reform have become more uncertain, with the national elections scheduled for 2018.

Mexico's housing market is cooling sharply. The nationwide house price index fell by 1.42% during the year to Q3 2017, in stark contrast with a y-o-y rise of 3.84% in the previous year. In fact, it was the first quarter of y-o-y decline since Q2 2014. On a quarterly basis, house prices dropped 0.63% in Q3 2017.

From the perspective of foreign homebuyers the slowdown in property prices is greater, because of the peso's sharp depreciation in recent months. Mexico's peso slumped against the US dollar by 14.9% in 2015 and by another 16.7% in 2016, the biggest annual decline since 2008. However, during the first eleven months of 2017, the peso recovered by about 13.3% to reach an exchange rate of MXN18.913 = USD1 in November 2017.

The Mexican economy grew by 2.3% in 2016, after growth of 2.6% in 2015, 2.3% in 2014, 1.4% in 2013, 4% in both 2011 and 2012, and 5.1% in 2011, according to the InstitutoNacional de Estadistica y Geografia (INEGI). The economy is expected to expand by 2.1% this year and by another 1.9% in 2018.

Detailed country-by-country analysis: Middle East

Middle East's housing markets have lost steam with three of the six weakest housing markets in our global house price survey in the region: Egypt, Qatar and UAE.

Egypt was the weakest housing market in our global survey, with the nationwide real estate index falling by 8.68% during the year to Q3 2017, worse than the previous year's 1.24% y-o-y decline. Surprisingly, house prices increased 7.65% during the latest quarter.

However in nominal terms, house prices are rising strongly in Egypt due to extraordinarily high inflation caused by the government's decision in November 2016 to shift to a floating exchange rate regime that resulted to a dramatic depreciation of the Egyptian pound (EGP) against major currencies. In Q3 2017, inflation stood at about 32%.

In an effort to buoy the property market, President Abdel Fattah el-Sisi recently ratified Law 17/2015, removing the last remaining restrictions on foreign ownership of land and property in Egypt, and introduced rules allowing the government, the biggest landowner in Egypt, to contribute land to the private sector as part of public-private partnership schemes against a share of the revenue.

Egypt's economy grew by 4.3% in 2016, on the back of strong private consumption and investment in energy, real estate and infrastructure, according to BNP Paribas. The economy is expected to grow by 4.1% this year and by another 4.5% in 2018.

Qatar's housing market is improving, despite a sharp economic slowdown and the diplomatic crisis. The nationwide real estate price index dropped 2.85% during the year to Q3 2017, a sharp improvement from last year's 14.09% y-o-y fall. Property prices fell 8.98% q-o-q during the latest quarter.

Surprisingly, demand is surging. In October 2017, the value of real estate transactions rose by 78.6% y-o-y to QAR5 billion (US$1.25 billion), according to Ezdan Holding Group. In 2016, the total value of real estate transactions had plunged by about 50%, after reaching an all-time high in 2015, boosted by a construction boom in preparation for the 2022 FIFA World Cup.

The Qatari economy slowed sharply last year to GDP growth of just 2.2%, after growing by an annual average of 4.2% during 2012-15, and 15.7% in 2008-11. Economic growth is expected to be a modest 2.5% this year and 3.1% in 2018, according to the IMF.

Dubai's residential property prices fell 2.84% during the year to Q3 2017, after a decline of 3.91% y-o-y in Q3 2016. It was the eleventh consecutive quarter of y-o-y house price falls. House prices fell by 0.97% during the latest quarter.

Dubai saw one of the world's worst housing crashes from Q3 2008 to Q3 2011 with house prices plunging by 53%. After double-digit house price increases from Q2 2012 to Q4 2014, the property market began to slow in the second half of 2014, amidst housing oversupply, subdued demand and slower economic activity.

Demand is now rising strongly again. In Q3 2017, the value of off-plan real estate transactions surged 118% from a year earlier while the number of transactions increased 86% over the same period, according to the Dubai Land Department.

The UAE's economic growth slowed to 3% in 2016, the slowest growth since 2010, according to the IMF. Abu Dhabi is projected to expand by a meagre 0.3% this year while Dubai will grow by 3.3%. For the country as a whole, UAE is expected to see a GDP growth of just 1.3% this year, mainly due to weaker-than-expected oil prices and OPEC-led production cuts.

Israel's decade-long house price boom could now be over, as government cooling measures intensify. The nationwide average price of owner-occupied dwellings increased by a miniscule 0.67% y-o-y in Q3 2017, down from the previous year's 5.8% growth. House prices rose by 0.69% q-o-q in Q3 2017.

In Q3 2017, new dwellings sold fell by 16.4% y-o-y to 6,141 units. Sales of new dwellings fell by 5.4% y-o-y to 29,878 units in 2016, after record sales of almost 31,600 units in 2015, as mortgage interest rates rose, according to the Central Bureau of Statistics (CBS).

Dwelling starts fell by 24.6% in Q2 2017 from a year earlier. On the other hand, completions were up by 5.4% y-o-y in 2016, the highest since 1999, and increased slightly by 1.5% y-o-y in Q2 2017.

Israel's economy grew by a seasonally-adjusted annualized rate of 4.1% in Q3 2017, mainly due to gains in exports, consumer spending and industrial investment. The economy is forecast to expand by around 3.1% this year and by another 3.3% in 2018, after growing by 4% in 2016, 2.6% during both 2014 and 2015, 3.3% in 2013, 2.9% in 2012, and 5% in 2011, according to the Bank of Israel (BOI). The BOI kept its benchmark interest rate at a record low of 0.1% in November 2017, in an effort to boost economic growth while maintaining price and financial stability.

Detailed country-by-country analysis: Oceania

New Zealand's housing market is now slowing sharply, mainly due to the introduction of new lending restrictions in October last year and worsening affordability. The nationwide median house prices rose by a meagre 0.04% during the year to Q3 2017, a sharp slowdown from y-o-y growth of 5.85% in the previous year and the lowest growth since Q1 2012. House prices dropped 1.24% q-o-q during Q3 2017.

Total dwellings sold across New Zealand were down 16% y-o-y in October 2017, according to the Real Estate Institute of New Zealand (REINZ). All regions saw falling demand, with the West Coast registering the biggest y-o-y drop in sales volume of 31% in October 2017, followed by Manawatu/Wanganui (-24%), Auckland (-21%), Northland (-21%), and Bay of Plenty (-21%). The number of days to sell increased by two days to 34 in October 2017 from a year earlier, according to REINZ. During the year ended October 2017, the number of new dwelling consents rose by 2.1% y-o-y to 30,866 units, according to Statistics New Zealand.

The economy grew by about 3.6% in 2016, the highest growth since 2007. The economy is expected to expand by 3.5% this year and by another 3% in 2018, according to IMF. The Reserve Bank of New Zealand (RBNZ) left the official cash rate (OCR) unchanged at a record low of 1.75% in November 2017, amidst growing signs of a housing market slowdown.

Detailed country-by-country analysis: Caribbean

Puerto Rico's housing market continues to struggle, amidst continued economic woes, high unemployment, massive emigration, and a near-catastrophic national debt crisis and credit rating downgrades. The seasonally-adjusted purchase-only house price index (inflation-adjusted) fell 0.35% during the year to Q3 2017. House prices increased 6.17% q-o-q in Q3 2017.

Historically, Puerto Rico's economy has closely mirrored trends in the United States. However the latest economic downturn has been more intense and has lingered longer in Puerto Rico. GDP has grown very little or declined over the past eight years, contracting every year from 2007 to 2016, with an exception in 2012 when the economy grew slightly by 0.5%. Puerto Rico has lost about 20% of its jobs since 2007. The population has shrunk by about 10% in the past decade. The poverty rate is now at 45%. And public health and retirement systems are now insolvent. Puerto Rico filed for the equivalent of bankruptcy protection in May 2017, unable to pay its massive debt or provide its citizens effective services. With US$70 billion in debt and US$50 billion in pension liabilities, Puerto Rico's bankruptcy filing is the biggest in the history of the United States.

The housing market has suffered tremendously. After huge annual house price increases in the early 2000s, the housing market came crashing down in 2008. Prices have dropped 30% in real terms from 2008 to 2016.

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