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Press Release

Q4 2013: World's housing markets in headlong boom, led by U.S. and Asia Pacific

Mar 20, 2014


The global house price boom continued to accelerate during 2013, led by U.S. and Asia-Pacific, according to a survey of official house price statistics for 2013 by the Global Property Guide.

Using inflation-adjusted figures, the Global Property Guide's survey reveals that house prices rose in 27 of 42 housing markets which have so far published housing statistics.The more upbeat nominal figures, which are more familiar to the public, showed house prices rising in 31 countries, and falling in only 11 countries.

Momentum:28 housing markets showed better performance in 2013, in momentum terms, than the same period last year, while only 13 housing markets showed weaker momentum.

Inflation-adjusted figures are used throughout, except for Kiev, Ukraine.

The global boom continues to gather pace:

  • U.S. housing market's best performance in 9 years. In the United States, the S&P/Case-Shiller seasonally-adjusted national home price index surged 9.37% during 2013. Quarter-on-quarter, the national home price index dropped slightly by 0.07% in Q4 2013.
    All 20 major U.S. cities saw house prices rise, with Las Vegas registering the biggest inflation-adjusted year-on-year increase of 23.7% in 2013. Construction activity remains upbeat, demand continues to rise and the economy remains healthy.
  • Pacific housing markets stronger. In New Zealand, median house prices rose by 8.02% during 2013, after rising 8.54% in 2012. Likewise, Australia's housing market saw its strongest performance in four years. House prices in the country's eight major cities rose by 6.47% during 2013.
  • Asian housing markets remain upbeat. In Taiwan, house prices soared by 14.46% during 2013, almost double the increase of 7.72% in the previous year. In the Philippines, the average price of 3-bedroom condominium units in Makati CBD surged by 10.56% during 2013, up from an increase of 4.85% in 2012. In Shanghai, China, the price index of second-hand residential buildings surged by 10.13% during 2013, in sharp contrast with the 1.85% decline during 2012. In Indonesia, residential property prices in the 14 largest cities rose by 5.82% during 2013, an improvement from the increase of 2.27% in 2012. Several Asian housing markets saw modest house price increases. These included Tokyo, Japan, with house prices rising by 3.91% in 2013, Thailand (3.87%), and Hong Kong (3.3%).
  • The Middle East's housing markets remain strong. After two years of spectacular house price rises, Dubai's housing market continues to grow stronger, with house prices soaring by 21.52% during 2013, after rises of 21.64% in 2012, and 6.3% in 2011. Likewise, in Israel, the average price of owner-occupied dwellings rose by 4.61% during 2013, after an increase of 4.12% during 2012.
  • Half of Europe is booming. In Tallinn, Estonia, the average purchase price of dwellings surged 16.55% during 2013, far higher than the meagre 1.59% growth seen in the same period last year. In Vienna, Austria, the residential property price index rose by 7.51% during 2013, its sixth consecutive year of continuous house price rises. Other strong European housing markets included Ireland, with house prices rising by 6.18% during 2013, Turkey (5.73%), UK (4.88%), Riga, Latvia (4.64%), and Iceland (4.33%). All, except Austria and Turkey, showed better performance in 2013 compared to the previous year. In addition, some European housing markets also saw modest to minimal house price rises. This group includedSweden, with house prices rising by 3.98% in 2013, Germany (3.69%), Switzerland (3.24%), Vilnius, Lithuania (2.41%), Kiev, Ukraine (1.63%), and Bulgaria (0.38%). All, except Ukraine, performed better this year compared to a year earlier.

Countries with weak performance:

  • Half of Europe still struggling. Romania was the world's weakest housing market during 2013, with house prices plunging by 10.43%, after annual house price falls of 5.96% in 2012, 6.99% in 2011, 22.08% in 2010, and 24.22% in 2009. In Greece, house prices dropped 7.26% during 2013, an improvement from the 13.77% year-on-year drop seen the previous year. Other European housing markets still depressed included Zagreb, Croatia with house prices falling by 6.27% during 2013; Russia (-5.86%); Spain (-4.38%); Netherlands (-4.16%); Warsaw, Poland (-3.55%); and Slovak Republic (-3.01%). European housing markets with smaller house price falls included Finland, (-2.83%), France (-2.02%), Norway (-1.32%) and Portugal (-0.68%).
  • South Africa's housing market falling again. In South Africa, the price index for medium-sized apartments fell by 2.39% during 2013, in sharp contrast with the 3.31% year-on-year increase in the previous year.

Conclusion:The global house price boom continues to gather pace, 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.

Source: Various series, data descriptions and sources here

U.S. housing market's best performance since 2004

The United States was the sixth strongest performer in our global house price survey. The S&P/Case-Shiller seasonally-adjusted national home price index surged 9.37% during 2013, up from a year-on-year rise of 5.27% in 2012, and annual declines of 6.69% in 2011, 4.85% in 2010, 3.72% in 2009, 19.56% in 2008 and 11.94% in 2007. Quarter-on-quarter, the national home price index dropped slightly by 0.07% in Q4 2013, from quarterly increases of 4.24% in Q3, 1.7% in Q2, and 3.24% in Q1 2012.

All 20 major U.S. cities saw their house prices rise, with Las Vegas registering the biggest inflation-adjusted year-on-year increase of 23.7% in 2013, followed by San Francisco (20.8%), Los Angeles (18.6%), Atlanta (16.4%), San Diego (16.2%), Detroit (15%), Miami (14.9%), Tampa (14.1%) and Phoenix (13.6%). As a reminder, these figures are adjusted for inflation, as are all subsequent figures, except those for the Ukraine.

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 6.38% year-on-year in 2013, the biggest year-on-year increase since 2004, and up from 3.56% in 2012. During the latest quarter, the FHFA index rose by 1.49%, after quarterly increases of 1.45% in Q3, 1.7% in Q2, and 1.59% in Q1 2013.

FHFA's all transactions house price index rose by 3.54% year-on-year to 2013, the biggest annual rise since 2005. Quarter-on-quarter, house prices increased 1.23% in Q4 2013, from quarterly increases of 1.26% in Q3, and 1.06% in Q2 and a quarterly drop of 0.05% in Q1 2013.

Residential construction activity in the U.S. remains upbeat. The total number of new housing unit building permits soared by 17.7% to 976,400 units in 2013 from a year earlier, according to the U.S. Census Bureau. All U.S. regions saw more housing units authorized, with the Northeast registering the biggest year-on-year rise of 27.3%, followed by the West (24.2%), Midwest (16.4%) and South (13.4%).

All other U.S. indicators are pointing upwards:

  • Privately-owned housing starts rose 18.7% from a year earlier to 926,700 in 2013, the highest number since 2007.
  • Privately-owned housing units under construction surged 28.7% in 2013, to 685,400 units.
  • Housing units completed soared 17.9% in 2013, to 765,100 units.

Likewise, U.S. home builder sentiment jumped to 58 in December 2013, up from 54 the previous month, matching an eight-year high recorded in August 2013, according to theNational Association of Home Builders. A reading of 50 is the midpoint between positive and negative sentiment. However in February 2014, the sentiment index dropped sharply to 46, due to unfavourable weather conditions, and the shortage of lots and labour.
Demand remains robust. The total number of new houses sold in the U.S. soared by 16.3% in 2013 to 428,000 units, according to the U.S. Census Bureau.

In February 2014, the average interest rate for 1-year adjustable rate mortgages (ARMs) was 2.54%, down from 2.61% in the same period last year, according to Freddie Mac. In February 2014, the average interest rate for 15-year fixed rate mortgages (FRMs) was 3.35%, up from 2.77% the previous year, while the average rate for 30-year FRMs was 4.3%, up from 3.53% a year earlier. The Fed has kept the fed funds rate near zero since 2008 in an effort to boost the U.S. economy.

Real GDP growth stood at 1.9% for 2013, according to the U.S. Bureau of Economic Analysis. The U.S. economy is expected to expand by 2.6% this year.

Canada's house prices continue to rise modestly

House prices in Canada's eleven major cities rose by 2.53% during 2013, after several rounds of market cooling measures, after annual price rises of 2.19% in 2012, 4.42% in 2011, 1.18% in 2010, and 3.59% in 2009. House prices increased by 0.58% in Q4 2013 from the previous quarter.

Calgary saw the highest year-on-year increase of 5.2% in 2013, followed by Vancouver (4.21%), and Toronto (3.62%). Smaller house price rises were seen in Hamilton (2.38%), Edmonton (2.33%), Winnipeg (2.11%) and Quebec (0.21%). In contrast, Victoria saw the biggest annual house price fall of 5.19% in 2013, followed by Halifax (-85%), Montreal (-0.8%), and Ottawa (-0.24%).

"The reality on the ground is that the government has definitely achieved a soft landing in housing," said David Rosenberg of Gluskin Sheff + Associates Inc.

House prices in Canada surged 49% from Q1 2000 to Q1 2009, then increased by another 17% between Q2 2009 and Q4 2012, despite government efforts to cool the market.

Canada's house prices are expected to rise 2.3% during 2014, according to theCanadian Real Estate Association(CREA). In 2014, house prices are expected to rise by 3.4% in Alberta, 2.5% in British Columbia, 1.9% in Ontario, and a meagre 0.1% in Quebec.

Home sales activity rose by 0.8% in 2013 to 458,200, according to theCanadian Real Estate Association(CREA). This coming year, sales are expected to increase by another 3.7%.

The Bank of Canada(BoC) has kept its key interest rate at 1% since September 2010. But in an attempt to slow the market, in 2013 the country's federal housing agency, the Canada Mortgage and Housing Corporation (CMHC) limited its guarantees to banks and other lending companies.

Canada's economic growth stood at about 2% in 2013, up from 1.7% the previous year, according to Statistics Canada. The economy is projected to grow by 2.5% in both 2014 and 2015, according to the Bank of Canada(BoC).

Pacific housing markets continue to show impressive growth

Median house prices in New Zealand rose by 8.02% during 2013, after a rise of 8.54% in 2012, and falls of 1% in 2011, and 5.95% in 2010. In Q4 2013, house prices increased strongly, up 6.65% on the quarter. Residential dwelling consents soared by 25.8% in 2013, according to Statistics New Zealand, with consent values surging 29.7%.
However demand is now falling, following central bank restrictions on high loan-to-value ratio (LVR) lending. In January 2014, total dwellings sold fell by 4.3% from the same period last year, according to the Real Estate Institute of New Zealand(REINZ). Median-days-to-sale also increased by two days, to 43 days in January 2014, compared to a year ago.

New Zealand's economy expanded by about 3% in 2013, up from 2.7% in 2012, 1.4% in 2011 and 1.9% in 2010, according to HSBC. Next year is expected to see New Zealand's strongest economic growth since 2007, with projected GDP growth of 3.3%, led by a surge in household spending, according to the Organisation for Economic Cooperation and Development (OECD).

"We think New Zealand will be the rock star economy of 2014. Growth is going to pick up pretty solidly this year," said Paul Bloxham of HSBC.

TheReserve Bank of New Zealand(RBNZ) has kept its official cash rate (OCR) at a record low of 2.5% since March 2011. However “the Bank remains committed to increasing the OCR as needed to keep future average inflation near the 2 percent target mid-point,” according to RBNZ.

In 2013, Australia's housing market saw its strongest performance in four years. House prices in the country's eight major cities rose by 6.47% during 2013, up from a meagre increase of 0.48% in 2012, an annual decline of 7.26% in 2011 and a rise of 1.91% in 2010. House prices increased 2.66% quarter-on-quarter in Q4 2013, the fifth consecutive quarter of gains.

Residential construction is surging. Dwelling units approved, seasonally-adjusted, soared by 14.6% from a year earlier in December 2013 to 16,583 units, according to theAustralian Bureau of Statistics(ABS). Likewise, the total value of seasonally-adjusted new residential building consents skyrocketed by 29.1% year-on-year to NZ$4.47 billion (US$3.75 billion).

TheReserve 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.

The Australian economy is estimated to have grown by 2.5% in 2013, after GDP growth of 3.7% in 2012, according to the IMF.

Asian housing markets remains buoyant

Seven of the nine Asian markets for which figures are available saw their house prices rise during 2013.

Taiwanretains its spot as Asia's star performer, and the third best performer in our global survey. House prices soared by 14.46% during 2013, almost double the increase of 7.72% during the previous year. On a quarterly basis, house prices increased by 1.89% in Q4 2013.

House prices in Taiwan are nearing the maximum, called the “Perng Fai-nan Line” equivalent to TW$3 million (US$100,000) per ping, which the government can tolerate before it implements housing market cooling measures. At The Palace, the country's most expensive upscale apartment complex, prices have almost reached the “Perng Fai-nan Line”, according to the Ministry of Finance.

Construction activity continues to surge. Construction license for houses skyrocketed by 34.9% during 2013 to 133,072 units, according to theMinistry of Interior. Moreover, the total floor area of residential construction permits also soared by 31.6% to more than 25 million square metres (sq. m.) over the same period.

The Taiwanese economy is estimated to have grown by 1.74% in 2013, after real GDP growth of 1.3% in 2012, 4.1% in 2011, and 10.8% in 2010, according to the government. In 2014, economic growth is projected at 2.59%.

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 10.56% during 2013, after annual increases of 4.85% in 2012 and 2% in 2011, and declines of 0.43% in 2010, 5.87% in 2009 and 1.65% in 2008. Quarter-on-quarter, house prices rose by 1% in Q4 2013.

Demand remains strong, as indicated by soaring real estate loans. In September 2013, the volume of real estate loans rose by 38.5% year-on-year to PHP776.65 billion (US$17.43 billion), according to the Bangko Sentral ng Pilipinas, the country's central bank.

The Philippine housing market is expected to continue accelerating this year, buoyed by increasing numbers of foreign investors and the growing business process outsourcing industry, according to real estate firm, CBRE.

"Despite recent calamities, the country's real estate sector is a buoyant market and global investors are starting to recognize the country as a top investment spot in Asia-Pacific. No longer is the Philippines an underestimated market, investors now see the sweet spot that it is in all property fronts - office, residential, industrial, retail and leisure... We think 2014 will be the best market we've seen in 20 years in the Philippines, especially in the BPO outsourcing side," said Rick Santos of CBRE Philippines.

Philippine GDP growth was 7.2% in 2013, according to the National Statistical Coordination Board (NSCB). The government is targeting growth this year between 6.5% and 7.5%.

China's housing market showed a remarkable turnaround in 2013, and is the fifth strongest market in our global survey. In Shanghai, China, the price index of second-hand residential buildings surged by 10.13% in 2013, in sharp contrast with its 1.85% decline during 2012. On a quarterly basis, house prices in Shanghai increased 2.46% during the latest quarter.

Demand is rising. During the first 11 months of 2013, the total volume of new home sales, measured by gross floor area, soared 20.5% from the same period last year, the fastest pace in almost four years, according to the National Bureau of Statistics. In the longer-term, the announcement in November 12, 2013 that the one-child policy would be relaxed is expected to create additional housing demand in China.

The world's second largest economy expanded by 7.7% in 2013, after GDP growth rates of 7.7% in 2012, 9.3% in 2011, 10.4% in 2010, and 9.2% in 2009. The Chinese economy is expected to expand by 7.3% this year, according to the International Monetary Fund (IMF).

Indonesia's housing market was vibrant during 2013. Residential property prices in the country's 14 largest cities rose by 5.82% year-on-year in 2013, up from annual increases of 2.27% in 2012, and 0.82% in 2011 and annual declines of 3.21% in 2010, 0.24% in 2009, and 7.69% in 2008. In Q4 2013, house prices increased by 4.11% from the previous quarter.

Outstanding loans for house and apartment ownership rose by 26.6% year-on-year in December 2013, to IDR281.45 billion (US$24.32 million). Sales of residential properties rose 13% in Q4 2013 from the previous quarter, according to Bank Indonesia.

Interest rates for mortgage loans in Indonesia currently range from 9% to 12%.

In 2013, Indonesia's economic growth was 5.77%, from GDP growth rates of 6.23% in 2012, 6.5% in 2011, 6.2% in 2010 and 4.6% in 2009. Bank Indonesia forecasts that the economy will expand by 5.82% in 2014.

Several Asian housing markets saw more modest house price increases. Both Japan and Thailand showed a notable turnaround in 2013 compared to a year ago. In Tokyo, Japan, house prices rose by 3.91%year-on-year in 2013, in sharp contrast with the annual drop of 1.09% in the previous year. Likewise, in Thailand, property prices also rose by 3.87% during 2013, up from a year-on-year decline of 1.94% in the previous year. However on a quarterly basis, house prices dropped by 1.77% in Thailand and by 1.44% in Tokyo, Japan during the latest quarter.

On the other hand, Hong Kong's housing market is slowing sharply, amidst government efforts to cool down the housing market. Residential property prices in Hong Kong rose by a modest 3.3% during 2013, a sharp slowdown from the 21.11% year-on-year rise in the previous year. Hong Kong saw a house price drop of 3.56% quarter-on-quarter in Q4 2013.

Demand is also plunging. In 2013, the total number of homes sold in Hong Kong plummeted by 37.7% to 50,676 units from a year earlier, according to theRatings and Valuation Department (RVD). Economic growth was estimated at 3% in 2013, from real GDP growth rates of 1.5% in 2012, 4.9% in 2011 and 6.8% in 2010, according to the IMF. The economy is expected to expand by 4.4% this year.

Singapore's housing market remains weak, amidst modest economic growth. House prices dropped 0.9% during 2013, after a fall of 1.13% in 2012, and year-on-year rises of 0.28% in 2011, 13.06% in 2010, and 2.59% in 2009. In Q4 2013, house prices fell by 1.77% from the previous quarter.

Demand remains depressed. In 2013, the total number of new private homes sold plunged by 32.7% from a year earlier, to only 14,948 units, the lowest level since 2009, according to Savills Singapore. Likewise, the number of resale and sub-sale private homes also plummeted by 51% year-on-year in 2013.

House prices in Singapore are expected to remain steady or increase by 2% at most (in nominal terms) this year, according to Savills Singapore.

The Singaporean economy grew an estimated 3.7% in 2013, up from growth rates of 1.3% in 2012, 5.2% in 2011, 14.8% in 2010, and an annual decline of 0.8% in 2009. The economy is expected to expand by about 3.4% this year and another 3.6% next year, according to the IMF.

Delhi, India remains Asia's weakest housing market in 2013, and the world's second weakest. Delhi house prices plunged by 9.1% in 2013 from a year earlier, in sharp contrast with the rise of 6.12% in 2012, and 25.16% in 2011.

In 2013, the Indian economy was estimated to have expanded by 3.8%, a slight improvement from its 3.2% growth in 2012, but far below the average annual growth of 8.4% seen from 2009 to 2011, according to the IMF. The economy is expected to expand by 5.1% this year, and by 6.3% in 2015. To rein in inflationary pressures, the central bank has raised the benchmark repurchase rate three times since September 2013, to 8% by end-January 2014.

House prices continue to surge in the Middle East

Dubai,UAE remains the best performer in our global house price survey for the fourth consecutive quarter. After two years of spectacular house price rises, Dubai's housing market continues to grow stronger, with house prices soaring by 21.52% during 2013, after year-on-year rises of 21.64% in 2012, and 6.3% in 2011. Quarter-on-quarter, house prices in Dubai surged 8.27% during the latest quarter.

Property demand continues to soar. In 2013, the total number of real estate transactions in Dubai jumped by 52% to 63,652 from a year earlier, according to Dubai Land Department (DLD). Likewise, the total amount of transactions in the emirate reached more than AED236 billion (US$64.3 billion) in 2013, up by 53% from AED154 billion (US$41.9 billion) in the previous year.

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 adverse impact of the global financial and economic meltdown. Then in Q2 2012, Dubai's housing market started to recover, thanks to the emirate's robust economic growth, bolstered by several other factors, including the availability of finance, the city's status as a safe haven, an exchange rate pegged to the U.S. dollar, and improved consumer and investor confidence.

To prevent another property bubble from emerging, the government recently issued circulars to banks introducing mortgage caps and doubled property registration fees from 2% to 4%.

Overall GDP growth for UAE was estimated at about 4% in 2013, after expanding by 4.4% in 2012, 3.9% in 2011, and 1.7% in 2010, according to the IMF. Hosting the World Expo 2020 is projected to add at least 1.5 percentage points per year to Dubai's real GDP growth rate from 2014 to 2020, resulting to an average annual growth rate of 5.5%, according to the Institute of International Finance (IIF).

Likewise, Israel's housing market remains strong, with the average price of owner-occupied dwellings rising by 4.61% during 2013, after an annual increase of 4.12% in 2012 and a year-on-year drop of 2.37% in 2011. However, house prices dropped 1.18% during the latest quarter.

Property demand is rising. In 2013, the total number of new dwellings sold rose by 9.3% year-on-year, to 24,408 units, according to the Central Bureau of Statistics (CBS). The number of new dwellings for sale was also up by 5% to 22,733 units over the same period.

The residential construction sector continues to expand. In 2013, the total number of dwellings started increased 3.4% year-on-year to 44,341 units, according to the CBS. In addition, the total number of dwellings completed also rose by 11.8% to 41,972 units in 2013 from a year ago.

Israel's economic growth is estimated at 3.8% in 2013, after registering real GDP growth rates of 3.4% in 2012, 4.6% in 2011, and 5.7% in 2010, according to the IMF. The economy is projected to expand by an average of 3.2% from 2014 to 2015.

Even Europe is experiencing house-price booms

Of the twenty-four European housing markets included in our global housing market survey, 13 saw house price rises during 2013 while the remaining 11 markets were still struggling to recover. However, seventeen performed better in 2013 than the previous year, while only six showed a poorer performance.

Estonia remains Europe's best performer during 2013 and the second best housing market in our global survey, despite slowing economic growth. The average price of dwellings in Tallinn surged 16.55% in 2013, far higher than the meagre 1.59% growth seen in the same period last year. Quarter-on-quarter, house prices surged 5.69% during the latest quarter. Purchase-sale contracts rose by 14.7% in 2013 to 41,822, according to Statistics Estonia.

Residential construction activity was flat, however. The total number of building permits granted for the construction of dwellings rose by 0.4% in 2013 to 3,049, according to Statistics Estonia. Likewise, dwelling completions increased 4.5% to 2,079 units.

Estonia's economic growth is estimated at 1.5% in 2013, down from GDP growth of 3.9% in 2012, 9.6% in 2011 and 2.6% in 2010, according to the IMF. The economy is projected to grow by 2.6% in 2014 and by another 3.9% in 2015, according to Eesti Pank.

Austria is the second strongest performer in Europe, though its performance this year was noticeably poorer than last year. The residential property price index in Vienna, the capital, rose by 7.51% during 2013, its sixth consecutive year of continuous house price rises. On a quarterly basis, property prices increased 1.62% in Q4 2013.

Residential construction activity remains strong. In the third quarter of 2013, the total number of dwellings authorized in new residential buildings surged almost 71.8% to 16,650 units from the same period last year, based on latest figures released by Statistics Austria.

Austria's economy expanded only 0.3% in 2013, after growth rates of 0.9% in 2012, 2.8% in 2011, and 1.8% in 2010, according to the Austrian Economic Chambers. The economy is projected to expand by 1.7% in both 2014 and 2015.

Other strong European housing markets included Ireland, with house prices rising by 6.18% during 2013, Turkey (5.73%), UK (4.88%), Riga, Latvia (4.64%), and Iceland (4.33%). All, except Turkey, showed better performance in 2013 compared to the previous year. All saw positive quarter-on-quarter growth in Q4 2013.

European housing markets with modest house price rises includedSweden, with house prices rising by 3.98% in 2013, Germany (3.69%), Switzerland (3.24%), Vilnius, Lithuania (2.41%), Kiev, Ukraine (1.63%), and Bulgaria (0.38%). All, except Ukraine, performed better this year compared to a year earlier.

However half Europe remains in the doldrums

Nine out of the ten weakest housing markets in our global survey were all in Europe.

For the first time in 2013, Romania was the world's weakest housing market, with house prices plunging by 10.43%, after house price falls of 5.96% in 2012, 6.99% in 2011, 22.08% in 2010, and 24.22% in 2009. On quarterly basis, house prices declined by 2.02% during the latest quarter.

Despite Romania's falling house prices, residential construction activity is rising. In December 2013, the total number of residential building permits rose by 9% to 2,553 from a year ago, according to the National Institute of Statistics. The total useful area of building permits issued also increased 18.6% year-on-year to 456,014 sq. m. in December 2013.

Romania's economic growth is estimated at about 1.6% in 2013, after growth of 0.7% in 2012, 2.2% in 2011, and annual declines of 1.1% in 2010, and 6.6% in 2009, according to the IMF.

Greececomes third on the list of the world's worst performers. House prices dropped 7.26% during 2013, an improvement from the 13.77% fall the previous year. on quarterly basis, Greek house prices dropped 3.48% in Q4 2013.

The Greek economy contracted by about 4.2% in 2013, according to the IMF. After six years of recession, the economy is expected to grow this year, with GDP growth forecast of 0.6%.

Other European housing markets which were still struggling included Zagreb, Croatia with house prices falling by 6.27% during 2013, Russia (-5.86%), Spain (-4.38%), Netherlands (-4.16%), Warsaw, Poland (-3.55%), and Slovak Republic (-3.01%). The good news is that all of these European countries, except Russia, saw their house price falls decelerate sharply in 2013 from a year earlier. Quarter-on-quarter, house prices fell by 1.03% in Zagreb, Croatia during Q4 2013, 2.45% in Spain, 0.88% in Russia, and 0.14% in both Warsaw, Poland and Slovak Republic. Netherlands recorded a quarterly rise of 0.19% during the latest quarter.

Some European housing markets saw smaller house price falls. These included Finland, with house prices dropping by 2.83% year-on-year to 2013, France (-2.02%), Norway (-1.32%) and Portugal (-0.68%). All except Portugal showed poorer performance this year compared to 2012. On a quarterly basis, house prices fell by 1.15% in Finland, 1.48% in France, 3.09% in Norway, and 0.09% in Portugal.

Brazil's surprisingly strong performance

Gone are the days of double-digit house price rises. But Brazil's housing market remains robust. Contrary to predictions of an abrupt bubble-burst, house prices in Sao Paulo, Brazil rose by 7.59% during 2013, after an increase of 9.38% in 2012, 19.18% in 2011, 17.11% in 2010 and 16.56% in 2009. House prices in Sao Paulo were up 1.61% in Q4 2013 from the previous quarter.

From 2007 to 2013, inflation-adjusted house prices in Sao Paulo soared by 113% and by 144% in Rio De Janeiro. Brazil's housing boom has mainly been propelled by a continuous decline in interest rates in recent years. 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 in the first half 2013, the central bank raised the benchmark interest rate seven times to 10.5% in January 2014, from 7.25% in April 2013, to rein in inflation.

“The surge in home prices [in Brazil] was mainly driven by massive credit expansion, which followed the sustained decrease of historically high interest rates, the increased availability of cheap savings deposits that partly have to be used to fund mortgages, and legal reforms that streamlined the foreclosure process,” according to Fitch Ratings.

Brazil's weakening economy and the central bank's policy are negatively affecting the housing market. However, many foreign investors remain optimistic, as Rio de Janeiro will host the FIFA World Cup final match this June 2014 and the Olympics in 2016, which are now seen to have positive impact on house prices, especially in that city.

In addition, President Dilma Rousseff has been pouring money into the housing market, using federal subsidies and state bank loans. Rouseff has nearly doubled spending on the country's plan to build two million affordable homes by end-2014. Moreover, Rousseff also extended tax cuts to buoy demand, boosted subsidized credit to businesses and unveiled a US$240 billion infrastructure project to attract investments.

Brazil's economy expanded by 2.3% in 2013, after GDP growth of 0.87% in 2012, 2.7% in 2011 and 7.5% in 2010, according to the central bank. The Brazilian economy is expected to grow by only 1.95% this year, with the central bank signalling it will continue to raise the Selic rate to curb inflation.

Source: Various series, data descriptions and sources here

South Africa's housing market falling again

In South Africa, the price index for medium-sized apartments fell by 2.39% during 2013, in contrast to the previous year's 3.31% increase. On a quarterly basis, house prices increased by 0.84% 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%.

The South African economy expanded by 2% in 2013, after GDP growth of 2.5% in 2012, 3.5% in 2011, and 3.1% in 2010, according to the International Monetary Fund (IMF). The economy is expected to expand by 3% in 2014, according to forecasts by the South African Reserve Bank (SARB).

The benchmark repo rate has remained art 5% since a surprise cut in July last year, to boost economic growth.The SABOR (South African Benchmark Overnight Rate) stood at 4.82% in December 31, 2013, slightly down from 4.89% during the same period last year.

References:
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