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Investment Analysis

Review of the world's housing markets in 2015: Europe and North America in full scale boom, Asia, Middle East slowed sharply

by GLOBAL PROPERTY GUIDE

Mar 22, 2016


The world's housing markets are now two-tiered, with most of Europe and North America still experiencing strong house price rises while Asia and the Middle East are slowing sharply. The five strongest housing markets in our global survey for the full year 2015 were Turkey (+14.32%), Sweden (+12.34%), Qatar (+10.61%), China (+9.12%) and Romania (+7.74%).

The biggest y-o-y house-price declines were in Russia (-15.35%), Egypt (-14.22%), UAE (-14.09%) and Puerto Rico (-14.09).

During 2015, house prices rose in 33 out of the 44 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 34 countries, and declines in 10 countries.

Momentum.During 2015, only 19 housing markets showed stronger upward momentum, while 25 housing markets showed weaker momentum. 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).

Inflation-adjusted figures are used throughout this survey, which covers the period till end of the fourth quarter of 2015. 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

By Region:

  • Europe in full-scale boom. Six of the ten strongest housing markets in our global survey are in Europe. Overall, house prices rose in 19 of the 23 European housing markets for which figures were available during 2015, the highest number recorded since the global financial crisis.

  • Turkey is now the strongest performer in our global survey, with house prices surging by 14.32% during 2015, up from an increase of 11.88%. House prices increased 5.66% q-o-q in Q4 2015. The strength of Turkey's housing market was boosted by robust economic growth, despite a collapsing currency, dissatisfaction with the government, chaos on Turkey's doorstep in Syria and Kurdish Iraq, and rising internal tensions.

    Sweden's housing market grew stronger, with house prices soaring by 12.34% during 2015, up from a rise of 8.78% in 2014 and the highest y-o-y rise since Q1 2006. This can be attributed to the central bank's negative interest rates and a shortage of housing supply. House prices increased 2.2% q-o-q in Q4 2015.

    Romania's housing market was remarkably strong, with strong economic growth and a government focus on rebuilding public trust. The average selling price of apartments rose by a record 7.74% during 2015, in sharp contrast with declines of 1.59% in 2014, 10.43% in 2013, 5.96% in 2012, 6.99% in 2011, 22.08% in 2010 and 24.22% in 2009. However, house prices declined 2.05% q-o-q in Q4 2015.

    Germany also emerged as one of the strongest housing markets in our global survey, mainly due to housing supply shortages and strong economic fundamentals. The price index for apartments rose by 7.62% in 2015, up from rises of 1.83% in 2014, 3.69% in 2013, 0.15% in 2012, 3.39% in 2011, and 1.65% in 2010. Apartment prices rose 2.56% q-o-q in Q4 2015.

    Other strong European housing markets included Iceland, with house prices rising by 6.93% in 2015, Ireland (6.53%), Tallinn, Estonia (4.56%), the UK (4.05%), Portugal (3.99%), Netherlands (3.95%), Zagreb, Croatia (3.81%), and Vilnius, Lithuania (3.68%). All saw positive quarterly growth during the latest quarter. However, only Iceland, Portugal and Croatia performed better in 2015 compared to a year earlier.

    European housing markets with minimal house price rises included Latvia, with house prices rising by 2.48% during 2015, Norway (1.99%), Switzerland (1.83%), Slovak Republic (1.62%), Macedonia (0.65%), Cyprus (0.56%), and Finland (0.52%). Latvia, Switzerland, and Slovak Republic recorded positive quarter-on-quarter growth in Q4 2015 of 0.77%, 0.11%, and 0.52%, respectively. In addition, all, except Latvia, Norway, and Macedonia, performed better in 2015 than the previous year.


  • Europe's weakest housing markets. Russia is now the weakest housing market in our global survey, amidst plunging oil prices, the collapsing ruble, and a steep economic contraction. Russian residential property prices plunged by 15.35% in 2015, worse than last year's decline of 6.15% and the biggest annual drop since 2011. House prices fell by 3.62% during the latest quarter.
  • Greece's housing market remains depressed, with its seemingly unending economic crisis and growing social unrest. The average price of dwellings dropped 4.91% in 2015, worse than its 3.93% price decline in 2014. Quarter-on-quarter, house prices fell 1.5% in Q4 2015. House prices have been falling in Athens since 2008.

    Ukraine's housing market has improved, as life is now gradually returning to normal after the conflict with Russia officially ended last year. House prices in Kiev fell by just 2.76% in 2015, a sharp improvement from a decline of 37.38% in 2014. House prices rose slightly by 0.04% quarter-on-quarter in Q4 2015.

    Spain's lacklustre performance continues with house prices falling by 1.71% in 2015, a slight improvement from a drop of 1.96% a year earlier. House prices fell 1.2% during the latest quarter.

  • Asian housing markets are losing steam, except China. Seven of the ten Asian markets for which figures are available saw house price increases during 2015, but these were mostly modest increases, with only China's performance very strong. Moreover, only three performed better in 2015 than the previous year.

  • China's housing market soared to new highs, after many government measures to support the housing market. In Shanghai the price index of second-hand houses rose by 9.12% in 2015, in sharp contrast to a decline of 2.89% the previous year. During the latest quarter, house prices in Shanghai rose by 3.79%.

    The Philippines' housing market is also slowing, despite strong economic growth. The average price of 3-bedroom condominium units in Makati CBD rose by 2.96% in 2015, down from increases of 4.29% in 2014, 9.86% in 2013, and 4.87% in 2012. Housing prices dropped 0.84% q-o-q during Q4 2015.

    South Korea's nationwide housing purchase price index rose by a modest 2.25% in 2015, an improvement from the rise of 0.82% in 2014 and the biggest y-o-y rise in since 2006, amidst low interest rates and relaxed mortgage lending rules. House prices increased by 0.7% q-o-q during the latest quarter.

    Asian housing markets with minimal house price rises included Thailand, with house prices rising by 1.98% during 2015, Tokyo, Japan (0.92%), Vietnam (0.86%) and Hong Kong (0.05%). All, except Japan and Hong Kong recorded positive quarter-on-quarter growth in Q4 2015. However, all showed weaker performance in 2015 compared to the previous year.

  • Some Asian housing markets saw falling prices. House prices fell in three of the ten Asian markets for which figures were available during 2015.

  • Taiwan's nationwide house prices dropped 4.39% in 2015, in contrast with the increase of 1.26% in 2014, mainly due to the government's market-cooling measures. This was the first annual decline since 2008. House prices dropped 1.73% q-o-q in Q4 2015.

    Singapore's housing market continued to struggle, amidst a slowing economy. House prices fell by 3.06% in 2015, after declines of 3.97% in 2014, 0.37% in 2013, and 1.48% in 2012. House prices fell by 0.49% q-o-q during the latest quarter.

    Indonesia's housing market remained weak, with the residential prices in the country's 14 largest cities falling by 0.22% in 2015, in contrast with rises of 0.39% in 2014, 2.93% in 2013, and 2.27% in 2012. House prices increased slightly by 0.2% q-o-q during the latest quarter.

  • North America's housing markets grew stronger. The U.S. housing market remained robust, with surging demand and strong residential construction. The S&P/Case-Shiller seasonally-adjusted national home price index rose by 4.65% in 2015, after rises of 3.75% in 2014, 9.09% in 2013, and 4.66% in 2012. House prices increased by 0.74% during the latest quarter. Also stronger was the Federal Housing Finance Agency's seasonally-adjusted purchase-only U.S. house price index, which rose by 5.29% in 2015, up from an increase of 3.77% in 2014. The index increased by 0.52% q-o-q during the latest quarter. Both indices were adjusted for inflation, as are other figures used in this survey.
  • Canada's housing market continued to rise, despite repeated market-cooling measures. House prices in the country's eleven major cities rose by 4.52% in 2015, up from 3.47% the previous year and the biggest annual increase since 2007. During the latest quarter, house prices increased 0.7% q-o-q.

  • Middle East housing markets weakening. All of the four Middle Eastern housing markets included in our global survey performed worse in 2015 than the previous year.

  • Qatar's property market is now softening, though it remained the world's third strongest housing market in our survey. The nationwide real estate price index rose by 10.61% in 2015, sharply down from a rise of 31.81% in 2014. Property prices fell by 3.6% q-o-q during the latest quarter.

    Israel's nationwide average price of owner-occupied dwellings rose by 5.17% during 2015, after increases of 7.41% in 2014, 5.38% in 2013, and 4.12% in 2012. House prices increased 0.56% q-o-q in Q4 2015.

    Egypt is now the second worst performer in our global house price survey with the nationwide real estate index plunging by 14.22% in 2015. This is in sharp contrast with the rise of 1.14% in 2014. House prices fell by 6.73% q-o-q in Q4 2015.

    Dubai's housing market remains depressed. Dubai residential property prices plunged by 14.09% in 2015, in sharp contrast with the rise of 12.98% in 2014, and the biggest y-o-y drop since 2010. House prices fell by 1.14% during the latest quarter.

  • Pacific. New Zealand's housing market is now softening, amidst weakening economic growth. The nationwide median house prices rose by 3.24% in 2015, after rises of 4.6% in 2014, 8.02% in 2013, and 8.54% in 2012. House prices actually fell by 3.52% q-o-q during Q4 2015.
  • Africa. South Africa's housing market is slowing again, Though the price index for medium-sized apartments was up by 0.99% during 2015, that is less than the 2.21% rise the previous year. House prices increased 2.18% q-o-q in Q4 2015.
  • Latin America is mixed. Brazil's housing market reflected its ongoing economic and political crisis. In Sao Paulo, house prices fell by 7.37% in 2015, in contrast with rises of 0.83% in 2014, 7.59% in 2013, 9.38% in 2012, 19.18% in 2011, 17.11% in 2010, and 16.56% in 2009. Quarter-on-quarter, house prices dropped 2.72% in Q4 2015.
  • Mexico's housing market was buoyed by strong demand in resort communities and by economic growth. The nationwide house price index rose by 4.36% in 2015, up from meagre rises of 0.84% in 2014 and 0.39% in 2013 and a y-o-y decline of 1.15% in 2012. However on a quarterly basis, house prices dropped 1.72% in Q4 2015.

Source: Various series, data descriptions and sources here

DETAILED COUNTRY ANALYSIS

Europe's housing boom still accelerating!

Six of the ten strongest housing markets in our global survey are in Europe. House prices rose in 19 of the 23 European housing markets for which figures were available during 2015, the highest number recorded since the global financial crisis.

Turkey was the strongest performer in our global survey, with house prices surging by 14.32% during 2015, up from an increase of 11.88% last year. House prices increased 5.66% q-o-q in Q4 2015. Turkey's housing market was boosted by robust economic growth, despite a collapsing currency, dissatisfaction with the government, chaos on Turkey's doorstep in Syria and Kurdish Iraq, and rising internal tensions.

From 2007 to 2011, house prices in Turkey fell by 29% inflation-adjusted, due to economic growth slowing sharply to 0.7% in 2008, after GDP growth during 2002-2007 of 6.8% annually. Existing house prices plunged 14.65% in 2008, by 2.82% in 2009, by 3.54% in 2010 and by 2.39% in 2011. The housing market finally recovered in 2012, with house prices rising by an average of 6.1% annually from 2012 to 2014. The economy is estimated to have expanded by 4% in 2015, after GDP growth rates of 2.9% in 2014, 4.2% in 2013, 2.1% in 2012, 8.8% in 2011, and 9.2% in 2010, based on government estimates.

Meanwhile the decline of the Turkish lira against all major currencies, especially the euro, made residential properties more affordable to foreign homebuyers. The lira lost about 13.5% of its value against the euro from an exchange rate of TRY2.8544 = EUR1 in February 2015 to TRY3.2410 = EUR1 by end-February 2016.

Sweden's house prices soared by 12.34% during 2015, up from a rise of 8.78% in 2014 and the highest y-o-y rise since Q1 2006. This surge can be attributed to the central bank's negative interest rates and a shortage of housing supply. House prices increased 2.2% q-o-q in Q4 2015.

During Sweden's housing boom from 2000 to Q2 2008, house prices skyrocketed by 71%, inflation-adjusted. After a short-lived decline from Q3 2008 to Q1 2009 due to the global financial meltdown, residential property prices started to rise again in Q2 2009. There was a dip from Q4 2011 to Q3 2012 amidst a slowdown in economic growth, but house price growth resumed in Q4 2012 and price rises have been continuous since then. The Swedish economy is estimated to have expanded by 3.6% in 2015, its strongest growth since 2010, according to the European Commission.

Romania's housing market rose remarkably, amidst strong economic growth and the government's focus on rebuilding public trust. The average selling price of apartments rose by a record 7.74% during 2015, in sharp contrast with declines of 1.59% in 2014, 10.43% in 2013, 5.96% in 2012, 6.99% in 2011, 22.08% in 2010 and 24.22% in 2009. However, house prices declined 2.05% q-o-q in Q4 2015.

Demand is rising. The value of real estate transactions rose by about 10% in 2015 from the previous year, according to RE/MAX Romania. Residential construction activity is also recovering, with residential building permits reaching 39,112 units in 2015, up by 3.8% from a year earlier, according to the National Institute of Statistics (NIS). The Romanian economy expanded by a robust 4% in 2015, one of the EU's highest growth rates and in contrast to almost zero growth between 2009 and 2014. Romania's economy is expected to perform even better this year, due to tax cuts and salary increases.

Germany has emerged as one of the world's strongest housing markets, mainly due to housing supply shortages and strong economic fundamentals. The price index for apartments rose by 7.62% in 2015, up from rises of 1.83% in 2014, 3.69% in 2013, 0.15% in 2012, 3.39% in 2011, and 1.65% in 2010. Apartment prices rose 2.56% q-o-q in Q4 2015.
Long a picture of housing market stability, Germany was one of the few countries that avoided a house-price slump in the wake of the 2008-2009 global financial crisis. Since then, extremely low interest rates have encouraged demand. The economy expanded by 1.7% in 2015, slightly up from 1.6% growth in 2014 and its fastest growth since 2011, according to the Federal Statistics Office. The country's budget surplus in 2015 was 0.5% of GDP, the highest in 15 years.

Other strong European housing markets included Iceland, with house prices rising by 6.93% y-o-y in 2015, Ireland (6.53%), Tallinn, Estonia (4.56%), the UK (4.05%), Portugal (3.99%), Netherlands (3.95%), Zagreb, Croatia (3.81%), and Vilnius, Lithuania (3.68%). All saw positive quarterly growth during the latest quarter. However, only Iceland, Portugal and Croatia performed better in 2015 compared to a year earlier.

European housing markets with minimal house price rises included Latvia, with house prices rising by 2.48% during 2015, Norway (1.99%), Switzerland (1.83%), Slovak Republic (1.62%), Macedonia (0.65%), Cyprus (0.56%), and Finland (0.52%). Latvia, Switzerland, and Slovak Republic recorded positive quarter-on-quarter growth in Q4 2015 of 0.77%, 0.11%, and 0.52%, respectively. In addition, all, except Latvia, Norway, and Macedonia, performed better in 2015 than the previous year.

Greece and Russia continue to disappoint

Russia is now the weakest housing market in our global survey, with residential property prices plunging by 15.35% in 2015, worse than last year's decline of 6.15% and the biggest annual drop since 2011. Russia's house prices fell by 3.62% during the latest quarter.

The substantial difference between the nominal y-o-y decline in Russian house prices (-3.1%) and the real decline (-15.35%) was mainly due to Russia's very high inflation rate. The overall inflation rate stood at 12.9% in 2015, the highest rate since 2008, according to the Federal Statistics Service (Rosstat).

Russia's housing market continues to suffer from the country's financial crisis, largely unleashed by falling oil prices, but also by the Ukraine conflict and the intervention in Syria. In January 2016, crude oil prices dropped below US$27 per barrel, the lowest level since September 2003. Russia's currency has collapsed, and interest rates are high.

Russia's economy is experiencing its steepest contraction since 2009. GDP fell by 3.8% in 2015, according to the International Monetary Fund (IMF). The economy is expected to contract again by 0.8% to 1% this year, amidst international sanctions and very low oil prices, according to the Ministry of Economic Development.

From the perspective of a US$ buyer the price decline has been much greater, since the Rouble has lost more than half of its value against the U.S. dollar, from an exchange rate of RUB 35.24 = US$1 in February 2014, to RUB 77.20 = US$1 in February 2016.

Greece's housing market remains depressed, its economic crisis seemingly unending, and social unrest rising. The average price of dwellings dropped 4.91% in 2015, worse than its 3.93% price decline in 2014. Quarter-on-quarter, house prices dropped 1.5% in Q4 2015. House prices have been falling in Athens since 2008.

2015 was punctuated by two elections, the imposition of capital controls, negotiations to close another bailout, a referendum, a confidence crisis, bank closures, and preparations for a euro exit.

The Greek economy contracted by 2.3% in 2015, after meagre growth of 0.8% in 2014, and declines of 3.9% in 2013, 6.6% in 2012, 8.9% in 2011, 5.4% in 2010, 4.4% in 2009 and 0.4% in 2008. The economy is projected to shrink by 1.3% this year, according to the IMF.

In Ukraine, there is hope that life will gradually return to normal, after the conflict with Russia officially ended last year. House prices in Kiev fell by just 2.76% in 2015, a sharp improvement from the decline of 37.38% in 2014. House prices rose slightly by 0.04% quarter-on-quarter in Q4 2015. Ukraine's economy contracted by 9% last year, after declines of 6.8% in 2014 and 0.03% in 2013, according to the IMF. The economy is expected to return to growth this year, with GDP growth of 2%.

Spain continues to surprise on the negative side. Spanish house prices fell by 1.71% in 2015, only a slight improvement from their decline of 1.96% in 2014. On a quarterly basis, house prices dropped 1.2% during the latest quarter. The economy grew by 3.1% last year, its strongest growth since 2007. Economic growth this year is projected to be a modest 2.5%.

Asian housing markets slowing sharply

Seven of the ten Asian markets for which figures are available saw house price increases during 2015, though most were just modest increases. In fact, only China's house prices rose strongly performance last year. Moreover, only three Asian housing markets were stronger in 2015 than in 2014.

China's housing market soared to new highs, after government measures to support the housing market. In Shanghai the price index of second-hand houses rose by 9.12% in 2015, in sharp contrast to a decline of 2.89% the previous year. During the latest quarter, house prices in Shanghai rose by 3.79%.

Demand was strong, with home sales rising by 16.6% in 2015, according to Moody's Investors Service. However in 2016, nationwide home sales are expected to rise by just under 5%, reflecting China's slowing economy and developers' high debt levels.

China's strong house price rises conceal a massive problem of housing inventory, particularly in third-tier and fourth-tier cities. Currently, unsold homes are estimated at around 13 million. To solve this problem, the Chinese government recently announced a plan to purchase unsold residential properties and convert them into low-cost housing to reduce inventory levels. Moreover, in February 2016, the central bank cut the minimum mortgage down-payment for first-time buyers from 25% to 20%, in an effort to encourage demand. Unsurprisingly, during 2015 housing starts and completions fell by 14% and 6.9%, respectively.

The central bank kept its benchmark one-year lending rate at 4.35% in February 2016, after cutting it by 25 basis points in October 2015. The Chinese economy grew by 6.8% in 2015, the lowest growth in 25 years. Economic growth is expected to slow further to 6.3% this year and to 6% in 2017, according to the IMF.

In the Philippines, the average price of 3-bedroom condominium units in Makati CBD rose by 2.96% in 2015, down from increases of 4.29% in 2014, 9.86% in 2013, and 4.87% in 2012. Housing prices dropped 0.84% q-o-q during Q4 2015.

Makati CBD property prices soared by 24.6% from Q1 2011 to Q4 2014, amidst rapid economic growth. The Philippine economy grew by 6% last year, after GDP growth of 6.1% in 2014, 7.1% in 2013 and 6.7% in 2012. The economy is projected to grow by an average of 6.4% in 2016 and 2017.

South Korea's nationwide housing purchase price index rose by a modest 2.25% in 2015, after rising 0.82% in 2014 - the biggest y-o-y rise in since 2006, amidst low interest rates and relaxed mortgage lending rules. House prices increased by 0.7% q-o-q during the latest quarter.

South Korean home sales surged by 18.8% to 1,193,691 units in 2015, the highest level since 2006 when the government started to compile the data. The surge in demand was mainly due to a series of government measures to buoy the housing market, including a lift in reconstruction regulations and an easing of lending criteria.

However, the Korean housing market is expected to slow this year, as the government plans to impose tougher lending rules amidst swelling household debt. Rising interest rates in the U.S. and China's economic slowdown are also expected to slow Korea's economic growth. Korea's economy grew by 2.7% last year, after growth of 3.3% in 2014, 2.9% in 2013, 2.3% in 2012, and 3.7% in 2011. Economic growth is expected at 3.2% this year and 3.6% next year, according to the IMF.

However, from the perspective of a US buyer, the modest increase in house prices was offset by the depreciation of the won. In 2015, the South Korean won lost more than 6% of its value against the US dollar, the steepest decline since 2008. By early-March 2016, the exchange rate stood at KRW1235.94 = USD1.

Asian housing markets with minimal house price rises included Thailand, with house prices rising by 1.98% during 2015, Tokyo, Japan (0.92%), Vietnam (0.86%) and Hong Kong (0.05%). All, except Japan and Hong Kong recorded positive quarter-on-quarter growth in Q4 2015. However, all showed weaker performance in 2015 compared to the previous year.

Some Asian housing markets saw falling prices

House prices fell in three of the ten Asian markets for which figures were available during 2015.

Taiwan's nationwide house prices dropped 4.39% in 2015, after an increase of 1.26% in 2014, mainly due to the government's housing market cooling measures. This was the first annual decline since 2008. House prices dropped 1.73% q-o-q in Q4 2015.

Demand is now falling. In 2015, the value of housing transactions in Taiwan plunged by more than 20% from a year earlier, the weakest demand in almost 14 years. Taiwan's economy grew by a miniscule 0.75% last year, the lowest growth since 2009, amidst poor exports due to slowing demand from China. The country's GDP growth is expected to be between 2.1% and 2.7% this year, according to the National Development Council.

Singapore's housing market continues to struggle, amidst a slowing economy. House prices fell by 3.06% in 2015, after declines of 3.97% in 2014, 0.37% in 2013, and 1.48% in 2012. House prices fell by 0.49% q-o-q during the latest quarter.

Demand is gradually improving. The number of private residential units sold increased slightly by 1.7% to 7,440 in 2015, according to the Urban Redevelopment Authority. On the other hand, supply continues to fall. The number of uncompleted private residential units launched fell by about 8.3% to 7,056 units in 2015.

Singapore's economy expanded by 2.2% last year, after growth rates of 2.9% in 2014, 4.4% in 2013, 3.4% in 2012, 6.2% in 2011, and 15.2% in 2010. The economy is expected to grow by 2.9% this year and by 3.2% in 2017, according to the IMF.

In Indonesia, residential prices in the country's 14 largest cities fell by 0.22% in 2015, in contrast with rises of 0.39% in 2014, 2.93% in 2013, and 2.27% in 2012. House prices increased slightly by 0.2% q-o-q during the latest quarter.

Demand is now picking up. Residential property sales in Indonesia rose by 7% to 8% in 2015 from the previous year, according to the Realestat Indonesia (REI). Property sales are expected to continue increasing by around 10% to 12% this year. In an effort to attract foreign investors, in June 2015 the Indonesian government unveiled a plan to finally allow foreigners to purchase luxury apartments in the country.

Indonesia's economy grew by 4.7% in 2015, down from 5% in 2014 and the lowest growth since 2002. Economic growth is expected to be 5.2% this year and 5.5% next year.

U.S. housing market remains very strong

The U.S. housing market has actually strengthened, amidst satisfactory economic growth. The S&P/Case-Shiller seasonally-adjusted national home price index rose by 4.65% 2015 (inflation-adjusted), after rises of 3.75% in 2014, 9.09% in 2013, and 4.66% in 2012. House prices increased by 0.74% during the latest quarter.

This was supported by Federal Housing Finance Agency's seasonally-adjusted purchase-only U.S. house price index, which rose by 5.29% in 2015 (inflation-adjusted), up from an increase of 3.77% in 2014. The index increased by 0.52% q-o-q during the latest quarter.

House prices continue to rise in all 20 major U.S. cities, according to the Case-Shiller index, with Portland registering the biggest inflation-adjusted increase of 10.65% y-o-y in 2015, followed by San Francisco (9.61%), Denver (9.39%), Seattle (9.16%), Dallas (8.74%), San Diego (6.35%), Miami (6.33%), Detroit (6.28%), Tampa (6.15%), and Phoenix (5.53%). Washington and Chicago saw the lowest growth in house prices at 0.94% and 1.7%, respectively.

Residential construction remains strong. New privately-owned housing units authorized rose by 12% y-o-y to 1,178,138 units in 2015, according to the U.S. Census Bureau. Over the same period, the total number of housing starts rose by 11% while completions rose by 9.5%.

Demand is surging. New house sales were up by 15% to about 501,000 units in 2015 from a year earlier, according to the U.S. Census Bureau. There were about 234,000 units for sale by end-2015, more than 10% up from the previous year.

U.S. home builder sentiment stood at 58 in February 2016, down from 61 a month earlier but up from 55 in the same period last year, according to the National Association of Home Builders. A reading of 50 is the midpoint between positive and negative sentiments.

Low mortgage interest rates have been fuelling property demand. The average interest rate for 1-year adjustable rate mortgages (ARMs) remained low at 2.53% in 2015. In February 2016, the average interest rate for 5-year adjustable rate mortgages fell to 2.83% while the 15-year FRMs also dropped to 2.96, according to Freddie Mac. The average interest rate for 30-year FRMs fell to 3.66% in February 2016.

In the fourth quarter of 2015, the U.S. economy grew by an annualized rate of 0.7%, after growth rates of 2% in Q3 2015, 3.9% in Q2 2015 and 0.6% in Q1 2015, amidst weakening exports and manufacturing, and slowing consumer spending, according to the U.S. Bureau of Economic Analysis. Despite this, the U.S. economy grew by 2.4% last year, matching its pace in 2014. The world's largest economy is expected to accelerate this year, with 2.8% growth, according to the IMF.

Canada's housing market stronger

Despite repeated market-cooling measures, house prices in Canada's eleven major cities rose by 4.52% in 2015, up from 3.47% the previous year and the biggest annual increase since 2007. During the latest quarter, house prices increased 0.7% q-o-q.

Biggest rises: Vancouver saw the biggest inflation-adjusted house price increases of 11.1% in 2015, followed by Toronto (7.7%), Hamilton (7.1%), and Victoria (7%).

Biggest falls: Calgary recorded the biggest price drop of 4.2% in 2015, followed by Ottawa (-3.6%), Edmonton (-2.6%), Winnipeg (-2.6%), Quebec (-1.4%) and Montreal (-1.2%).

Home sales rose by 8% in January 2016 from the same period last year, according to the Canadian Real Estate Association (CREA). Sales were up in about two-thirds of all local markets, led by activity in the Lower Mainland of British Columbia, and the Greater Toronto Area. There were about 5.3 months of inventory on a national basis in January 2016, down from 5.4 months the previous month and the lowest level in about 6 years.

The Bank of Canada held its key interest rate unchanged at 0.50% in January 2016, after cutting it twice last year in response to plunging oil prices and worsening economic prospects. The key rate had previously been 1% from September 2010 to December 2014.
Canada's economy, battered by the oil price decline, grew just 1.2% last year, less than half the 2.5% growth seen in 2014 and the slowest growth since the 2009 recession, amidst lower business investment and domestic demand, according to Statistics Canada. The economy is expected to expand by 1.7% this year and by another 2.4% in 2017, according to the IMF.

Middle East's housing markets are weakening

All four Middle Eastern housing markets included in our global survey performed worse in 2015 than the previous year. Two countries had rising house prices during 2015, while the other two experienced sharp declines in house prices.

Qatar's property market is now softening, though it remained the world's third strongest housing market in our survey. The nationwide real estate price index rose by 10.61% in 2015, sharply down from a rise of 31.81% in 2014. Property prices fell by 3.6% q-o-q during the latest quarter.

The value of real estate transactions in Qatar reached an all-time high in 2015, boosted by rapid economic and population growth, and a construction boom in preparation for the 2022 FIFA World Cup. The economy grew by 4.7% in 2015, after GDP growth of 4% in 2014, 4.6% in 2013, 4.9% in 2012, 13.4% in 2011, 19.6% in 2010, and 12% in 2009, according to the IMF. The economy is expected to expand by 5% this year and 4.2% in 2017.

Israel's housing market remains robust. The nationwide average price of owner-occupied dwellings rose by 5.17% during 2015, after increases of 7.41% in 2014, 5.38% in 2013, and 4.12% in 2012. House prices increased 0.56% q-o-q in Q4 2015.

Demand is surging. New dwelling sales soared by more than 40% y-o-y to 32,366 units in 2015, according to the Central Bureau of Statistics (CBS). The number of new dwellings for sale increased 4% to 327,618 units over the same period. Likewise, residential building permits also rose by 4.7% to 9,649 units in the first eleven months of 2015 from the same period last year.

Israel's economy is grew by just 2.3% in 2015, its slowest pace in six years, due to falling exports and the July-August conflict with Palestinian militants in Gaza, according to the Bank of Israel. The Bank of Israel kept its benchmark interest rate at a record low of 0.1 in March 2016, in an effort to boost economic growth while maintaining price and financial stability.

Dubai's residential property prices plunged by 14.09% in 2015, in sharp contrast with the rise of 12.98% in 2014, and the biggest y-o-y drop since 2010. House prices fell by 1.14% during the latest quarter.

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

Despite this, the total number real estate transactions rose by 8% to 63,719 in 2015 from the previous year, according to Dubai Land Department. The value of real estate transactions reached US$72.7 billion in 2015. Around 48,000 units are expected to be delivered into the market from 2016 to 2018, according to CBRE.

House prices in Dubai are expected to fall further this year, amidst weaker investor sentiment and weak economic growth.

The UAE's economy grew by just 3% in 2015, after GDP growth of 4.6% in 2014, 4.3% in 2013, 7.2% in 2012 and 4.9% in 2011, according to the IMF. UAE's economic growth is expected to slow further to 2.6% this year, due to collapsing oil prices, a worsening Chinese economy and looming regional public spending cuts.

Egypt is now the second worst performer in our global house price survey with the nationwide real estate index plunging by 14.22% in 2015. This is in sharp contrast with the rise of 1.14% in 2014. House prices fell by 6.73% q-o-q in Q4 2015.

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 expanded by 4.2% last year, up from 2.2% in 2014 and the highest growth in 5 years, on the back of a more stable political environment, large donations from Gulf Cooperation Council (GCC) allies and improving business sentiment, according to the IMF. Economic growth is projected to slow to 3.8% this year, according to the World Bank, amidst foreign currency shortages and a weakening tourism sector following the downing of a Russian plane in October 2015.

New Zealand's housing market softening

New Zealand's housing market is slowing, amidst weakening economic growth. The nationwide median house prices rose by 3.24% in 2015, after rising 4.6% in 2014, 8.02% in 2013, and 8.54% in 2012. House prices actually fell by 3.52% q-o-q during Q4 2015.

Total dwellings sold were up 4.3% y-o-y to 5,048 units in January 2016, according to the Real Estate Institute of New Zealand (REINZ). All ten regions recorded increases in sales volumes, with Hawke's Bay registering the biggest y-o-y rise of about 36% in January 2016, followed by Northland (31%), and Waikato/Bay of Plenty (27%). New dwelling consents were 27,132 units in 2015, up by 9.8% from a year earlier, according to Statistics New Zealand. Likewise, the number of residential building permits rose by 10.5% to 10,524 over the same period.

New Zealand's economy was estimated to have expanded by a modest 2.2% in 2015, after growing by 3.3% in 2014, 2.5% in 2013, 2.9% in 2012, 1.3% in 2011 and 2% in 2010. The economy is expected to grow by 2.4% annually in 2016 and 2017, according to the IMF.
The Reserve Bank of New Zealand (RBNZ) kept its official cash rate (OCR) at 2.5% in January 2016, after cutting it four times last year, in an effort to boost economic growth amidst low inflation.

Brazil's housing market depressed; Mexico remains strong

Brazil's housing market is weakening, amidst the ongoing economic and political crisis. In Sao Paulo, house prices fell by 7.37% in 2015, in stark contrast with the rises of 0.83% in 2014, 7.59% in 2013, 9.38% in 2012, 19.18% in 2011, 17.11% in 2010, and 16.56% in 2009. Quarter-on-quarter, house prices dropped 2.72% in Q4 2015.

Brazil's economy is in deep recession, and its currency is plummeting. Worse, the country's political crisis sees no letup with President Dilma Rousseff fighting efforts to impeach her amidst the massive Petrobras corruption scandal. Consumer and investor confidence continue to decline. Recently, Brazil's sovereign rating was cut to junk by Moody's Investors Service, in line with the other two major rating companies.

The economy contracted by about 3% last year, after growing by 0.15% in 2014, 2.7% in 2013, 1.8% in 2012, 3.9% in 2011 and 7.6% in 2010, according to the IMF. This year, Brazil is headed for its worst economic performance since 1990, with an expected decline of 3.45%, according to the Banco Central do Brasil.

By end-December 2015, the Brazilian Real (BRL) had lost about 25% of its value against the U.S. dollar to reach an average monthly exchange rate of BRL4.0388 = USD1 as compared to BR3.0455= USD1 in the past 9 months. However by early-March 2016, the real recovered by almost 7% to reach an exchange rate of BRL3.7551 =USD1, following the arrest of former President Luiz Inacio Lula da Silva on suspicion of corruption, worsening the political crisis that threatens to topple the present administration.

House prices in Sao Paulo soared by 113% (inflation-adjusted) from 2007 to 2013, while Rio De Janeiro's rose by 144%, as interest rates were progressively cut from 26% to 7.25% between 2003 and 2012.

However starting in the first half 2013, the central bank raised the benchmark interest rate nine times to 11% in April 2014, causing a sharp economic slowdown. After holding the key interest rate steady for almost seven months, the central bank decided to raise it again by 25 basis points in October 2014, and by 50 basis points in December 2014. In 2015, the central bank again raised the key rate five times to 14.25%, the highest level for almost six years.

Mexico's housing market continues to grow stronger, buoyed by strong demand in resort communities and a sustainable economic growth. The nationwide house price index rose by 4.36% in 2015, up from meager growth of 0.84% in 2014 and 0.39% in 2013 and a y-o-y decline of 1.15% in 2012. However on a quarterly basis, house prices dropped 1.72% in Q4 2015.

Foreign homebuyers are boosting the property market. American and Canadian buyers are returning to Mexico, after a several-year slump, thanks to low oil prices and the strong US dollar, pushing home values up. In 2015, Mexico's peso slumped against the US dollar by about 16.8%, the biggest annual decline sine 2008. In January 2016, the peso depreciated further by around 6.6%. By end-February 2015, the exchange rate stood at MXN18.2059 = USD1, down from MXN15.0847 = USD1 a year ago.

The Mexican economy was estimated to have grown by 2.4% last year, after 2.1% in 2014, 1.4% in 2013, 4% in both 2011 and 2012, and 5.1% in 2011. Mexico is now considered as one of Latin America's star performers, with a projected average annual GDP growth rate of 3.7% in 2016 to 2019.

South Africa's housing market slowing

South Africa's price index for medium-sized apartments rose slightly by 0.99% during 2015, down from an increase of 2.21% the previous year. House prices increased 2.18% q-o-q in Q4 2015.

South Africa's economy grew by about 1.3% last year, its slowest growth since the country emerged from a recession 2009, based on government estimates. The economy is expected to slow further, with real GDP growth estimated at 0.9% this year, amidst severe drought and declining exports.

Despite the sluggish economic growth, the South African Reserve Bank (SARB), the country's central bank, hiked its benchmark repurchase rate by 50 basis points to 6.75% in January 2016, in an effort to stop the rand from depreciating further and to contain inflationary pressures. In the second half of 2015, the rand lost about 26% of its value, partly caused by a weak economy and the sudden reshuffling of the finance ministry. Currently, the exchange rate stands at ZAR15.6108 = USD1. The rand is expected to remain under pressure this year.

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