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Press Release

Q2 2016: Global house price boom accelerates again led by strong growth in China, Europe and North America, but sharp falls in Hong Kong, Russia, Brazil, Egypt, and Mongolia

Sep 19, 2016


The world's housing markets remain two-tiered, with most of Europe, North America, China and New Zealand experiencing strong house price rises while most of Asia, and the Middle East are slowing sharply. The five strongest housing markets in our global survey during the year to Q2 2016 were China (+20.38%), New Zealand (+10.43%), Romania (+10.1%), Germany (+9.89%), and Turkey (9.67%).

The biggest y-o-y house-price declines in Q1 2016 were in Russia (-12.46%), Egypt (-11.2%), Hong Kong (-10.73%), Mongolia (-10.55%), and Montenegro (-10.15%).
During the second quarter of 2016, house prices rose in 30 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 34 countries, and declines in 12 countries.

Momentum. During Q2 2016, 27 housing markets showed stronger upward momentum, while 19 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 first quarter of 2016. 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
  • Europe's house price boom continues unabated. Six of the ten strongest housing markets in our global survey were in Europe. House prices rose in 17 of the 22 European housing markets for which figures were available during the year to Q2 2016.
  • Romania is now the strongest housing market in Europe and the third best performer in our global survey, amidst strong economic growth and the government's focus on rebuilding public trust. The average selling price of apartments rose by 10.1% during the year to Q2 2016, from y-o-y rises of 11.55% in Q1 2016, 7.74% in Q4 2015, 7.57% in Q3 2015, and 4.83% in Q2 2015. House prices increased 0.77% q-o-q in Q2 2016.

    Germany's housing market remains strong, mainly due to housing supply shortages and strong economic fundamentals. The price index for apartments rose by 9.89% during the year to Q2 2016, from annual rises of 6.25% in Q1 2016, 7.62% in Q4 2015, 4.3% in Q3 2015, 4.2% in Q2 2015, and 6.04% in Q1 2015. Apartment prices rose by 3.71% q-o-q in Q2 2016.

    Turkey's housing market remained robust, with house prices in Istanbul rising by 9.67% during the year to Q2 2016, after y-o-y increases of 12.2% in Q1 2016, 12.51% in Q4 2015, 13.05% in Q3 2015, 13.9% in Q2 2015, and 13.18% in Q1 2015. House prices increased 0.36% q-o-q in Q2 2016 (note however that the survey's end-date preceded the July 2016 coup attempt). Turkey's housing market was boosted by strong foreign investment and a growing population, despite a collapsing currency, dissatisfaction with the government, and geopolitical tensions.

    Malta's property market is performing very well, buoyed by government measures aimed at supporting property demand, such as the Individual Investor Programme and stamp duty exemption for first time homebuyers. Maltese property prices rose by 7.63% during the year to Q2 2016, up from a y-o-y increase of 3.59% a year earlier. Despite this, property prices declined 5.6% q-o-q in Q2 2016.

    Iceland remained strong with house prices rising by 6.34% during the year to Q2 2016, at par with an annual rise of 6.19% a year earlier. House prices in Iceland increased 1.17% q-o-q in Q2 2016. Iceland's economy is expected to grow by a robust 4.2% this year, after expanding by 4% in 2015, 2% in 2014, 4.4% in 2013, 1.2% in 2012, and 2% in 2011, according to the IMF.

    Ireland's house prices continued to rise, albeit at a slower pace, with residential property prices up by 6.27% during the year to end-Q2 2016, after y-o-y increases of 7.74% in Q1 2016, 6.53% in Q4 2015, 9.24% in Q3 2015, 10.81% in Q2 2015, and 17.57% in Q1 2015. On a quarterly basis, Irish house prices dropped slightly by 0.9% in Q2 2016.

    Other strong European housing markets included Riga, Latvia, with house prices rising by 5.61% y-o-y in Q2 2016, followed by Slovak Republic (5.46%), the Netherlands (5.41%), Vilnius, Lithuania (5.28%), and the UK (4.82%). All saw positive quarterly growth during the latest quarter. Also, all performed better in Q2 2016 compared to a year earlier.

    European housing markets with minimal house price rises included Portugal with house prices rising by 2.87% during the year to Q2 2016, Tallinn, Estonia (2.75%), Spain (2.22%), Norway (2.04%), Finland (0.92%), and Macedonia (0.72%). All, except Estonia and Macedonia, recorded positive quarterly growth during the latest quarter. All, except Estonia and Norway, showed better performance in Q2 2016 compared to a year earlier.

  • Europe's weakest housing markets.Russia remains the weakest housing market in our global survey, with residential property prices plunging by 12.46% y-o-y in Q2 2016, a little worse than last year's decline of 11.13%. Russia's house prices fell by 2.27% during the latest quarter. Russia's housing market continues to suffer from the country's financial crisis, largely unleashed by low oil prices, but also due to the intervention in Syria and the negative impact of the recent war with neighboring Ukraine.
  • In Montenegro, prices of dwellings in new residential buildings dropped 10.15% y-o-y in Q2 2016, in sharp contrast with an annual rise of 2.38% in the previous year. On a quarterly basis, house prices dropped 0.78% during the latest quarter.

    Other European countries with minimal house price falls included Kiev, Ukraine, with house prices falling by 2.95% during the year to Q2 2016, Greece (-1.95%), and Switzerland (-1.15%). All recorded negative quarterly price changes during the latest quarter (Ukraine, -1.58%; Greece, -2.1%; and Switzerland, -1.36%). Despite this, only Switzerland showed worse performance in Q2 2016 compared to a year earlier.

  • Asian housing markets are now two-tiered. Five of the eleven Asian markets for which figures are available saw house price increases during the year to Q2 2016. Six Asian housing markets were stronger in Q2 2016 than a year earlier.
  • China's housing market was the best performer in our global house price survey, as house prices surged after the government introduced measures to support the housing market. In Shanghai the price index of second-hand houses surged by 20.38% y-o-y in Q2 2016, in sharp contrast to a decline of 0.12% in the same period last year and the highest annual rise since Q2 2008. During the latest quarter, house prices in Shanghai rose by 6.68%.

    Japan's housing market remains robust, despite a weak economy. In Tokyo, the average price of existing condominiums rose by 5.7% during the year to Q2 2016, from y-o-y increases of 5.45% in Q1 2016, 1% in Q4 2015, 8.97% in Q3 2015, 6.2% in Q2 2015, and 6.34% in Q1 2015. Residential property prices fell slightly by 0.22% q-o-q in Q2 2016.

    Asian housing markets with modest or minimal house price rises included Thailand, with house prices rising by 4.38% during the year to Q2 2016, Vietnam (3.58%), and South Korea (1.07%). Thailand and Vietnam recorded positive quarter-on-quarter growth in Q2 2016 of 2.17% and 1.64%, respectively, while South Korea saw a quarterly decline of 0.07%. Only Thailand showed better performance in Q2 2016 compared to the previous year.

  • Some Asian housing markets continue to struggle. House prices fell in six of the eleven Asian markets for which figures were available during the year to Q2 2016.
  • Hong Kong's housing market is now the weakest housing market in Asia and the third worst performer in our global house price survey. Residential property prices fell by 10.73% during the year to Q2 2016, in sharp contrast with the 16.88% y-o-y rise a year earlier. House prices rose 2.68% q-o-q in Q2 2016.

    Mongolia's housing market remains depressed, amidst a sharp economic slowdown. The nationwide house prices plunged by 10.55% during the year to Q2 2016, after y-o-y declines of 11.93% in Q1 2016, 12.24% in Q4 2015, 14.54% in Q3 2015, 15.28% in Q2 2015, and 14.28% in Q1 2015. During the latest quarter house prices dropped 3.21%.

    Taiwan's nationwide house prices dropped 4.58% y-o-y in Q2 2016, after an annual decline of 2.16% a year earlier, mainly due to government housing market cooling measures. This was its fifth consecutive quarter of annual declines since 2008. House prices increased 1.59% q-o-q in Q2 2016.

    Singapore's housing market is still weak, amidst fragile economy. House prices fell by 2.94% during the year to Q2 2016, after y-o-y declines of 2.35% in Q1 2016, 3.05% in Q4 2015, 3.62% in Q3 2015, 3.35% in Q2 2015, and 3.54% in Q1 2015. House prices fell by 1.21% q-o-q during the latest quarter.

    In The Philippines, the average price of 3-bedroom condominium units in Makati CBD rose by 2.86% during the year to Q2 2016, in contrast with y-o-y increases of 2% in Q1 2016, 2.96% in Q4 2015, 5.41% in Q3 2015, and 6.61% in Q2 2015 and 5.4% in Q1 2015. Housing prices dropped 3.9% q-o-q during Q2 2016.

    In Indonesia, residential prices in the country's 14 largest cities fell by 0.35% y-o-y in Q2 2016, after annual declines of 0.16% in Q1 2016, 0.2% in Q4 2015, 1.49% in Q3 2015, 1.07% in Q2 2015, and 0.26% in Q1 2015. House prices increased slightly by 0.34% q-o-q during the latest quarter. Demand continues to weaken sharply and total supply growth is expected to slow in the coming years.

  • North America's housing markets remain healthy. The U.S. housing market remains strong, despite a weakening of the economic recovery. The S&P/Case-Shiller seasonally-adjusted national home price index rose by 4% during the year to Q2 2016 (inflation-adjusted), after annual rises of 4.26% in Q1 2016, 4.51% in Q4 2015, 4.82% in Q3 2015, 4.3% in Q2 2015, and 4.41% in Q1 2015. House prices increased by 1.89% 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 4.34% during the year to Q2 2016 (inflation-adjusted), slightly down from y-o-y increases of 4.54% in Q1 2016, 5.36% in Q4 2015, 5.68% in Q3 2015, 5.62% in Q2 2015, and 5.29% in Q1 2015. The index was almost unchanged in Q1 2016 from the previous quarter.
  • Canada's housing market continues to grow stronger, despite repeated market-cooling measures. House prices in the country's eleven major cities rose by 8.4% during the year to Q2 2016, up from 4% the previous year and the biggest annual increase since Q2 2010. House prices increased 4.41% q-o-q in Q2 2016. Home sales, however, dropped 2.9% in July 2016 from the same period last year, the largest decline since April 2013, according to the Canadian Real Estate Association (CREA).

  • Middle East housing markets weakening sharply. Of the four Middle Eastern housing markets included in our global survey, all, except UAE, performed worse in Q2 2016 than the previous year. Two countries saw modest house price growth during the year to Q2 2016, while the other two experienced sharp declines in house prices.
  • Israel's housing market is softening sharply, amidst economic slowdown. The nationwide average price of owner-occupied dwellings rose by 3.29% during the year to Q2 2016, a slowdown from a y-o-y rise of 7.66% a year ago and the lowest annual increase since Q1 2014. House prices actually dropped 1.8% q-o-q in Q2 2016.

    Qatar's property market is now weakening rapidly, amidst economic slowdown. The nationwide real estate price index rose by a meager 1.29% during the year to Q2 2016, sharply down from y-o-y rises of 9.38% in Q1 2016, 10.76% in Q4 2015, 16.3% in Q3 2015, 21.47% in Q2 2015, and 27.81% in Q1 2015. Property prices fell by 3.84% q-o-q during the latest quarter.

    Dubai's residential property prices plunged by 5.79% during the year to Q2 2016, from a y-o-y decline of 11.72% in Q2 2015 and its sixth consecutive quarter of annual declines. House prices fell by 0.63% during the latest quarter. House prices in Dubai are expected to fall further by 10% this year, amidst weaker investor sentiment and weak economic growth, according to Standard & Poor's.

    Egypt is now the second worst performer in our global house price survey, with the nationwide real estate index plunging by 11.2% during the year to Q2 2016. This is in sharp contrast with the rise of 0.9% in the same period last year. House prices actually plunged by 15.44% during the latest quarter.

  • Pacific. New Zealand's housing market continues to grow stronger and is now the second best performer in our global house price survey. The nationwide median house prices rose by 10.43% during the year to Q2 2016, a sharp rise from a y-o-y increase of 5.19% in the same period last year. House prices rose by 0.58% q-o-q during Q2 2016.
  • Africa. South Africa's housing market remained weak, amidst economic uncertainty. The price index for medium-sized apartments fell by 0.32% during the year to Q2 2016, its fourth quarter of annual price declines. On a quarterly basis, house prices dropped slightly by 0.05% in Q2 2016. House prices are expected to continue falling in the remaining months of 2016, amidst the continued weakness of the rand, falling foreign investor confidence, and uncertain economic condition.
  • Latin America is mixed. Mexico's housing market continued to grow stronger, buoyed by strong demand in resort communities. The nationwide house price index rose by 5.32% y-o-y in Q2 2016, an improvement from an annual rise of 3.43% during the same period last year. On a quarterly basis, house prices increased 2.45% in Q2 2016.
  • Brazil's housing market remained depressed, amidst the ongoing economic crisis and an uncertain political landscape. In Sao Paulo, house prices fell by 7.59% during the year to Q2 2016, worse than the 3.52% decline seen in a year earlier. It was already its sixth consecutive quarter of falling house prices. Quarter-on-quarter, house prices dropped 1.58% in Q2 2016.

    Chile's housing market was also down, with the average price of new apartments in Greater Santiago falling by 1.36% during the year to Q2 2016, in contrast with an annual rise of 2.93% a year earlier. On a quarterly basis, house prices dropped 2.62% in Q2 2016.

    Source: Various series, data descriptions and sources here

A detailed analysis of individual regions and countries

Europe's housing boom continues unabated

Six of the ten strongest housing markets in our global survey are in Europe. House prices rose in 17 of the 22 European housing markets for which figures were available during the year to Q2 2016.

Romania is now the strongest housing market in Europe and the third best performer in our global survey, amidst strong economic growth and the government's focus on rebuilding public trust. The average selling price of apartments rose by 10.1% during the year to Q2 2016, from y-o-y rises of 11.55% in Q1 2016, 7.74% in Q4 2015, 7.57% in Q3 2015, and 4.83% in Q2 2015. House prices increased 0.77% q-o-q in Q2 2016.

This comes as a surprise given Romania's disappointing performance from 2008 to 2014, amidst struggling economy. 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 the second half of 2015 that the housing market fully began to recover. The Romanian economy expanded by a robust 3.7% in 2015, one of the EU's highest growth rates, and a marked contrast to the almost zero growth between 2009 and 2014. Romania's economy is expected to grow by 4.2% this year, due to tax cuts and salary increases.

Germany's housing market remains strong, mainly due to supply shortages and strong economic fundamentals. The price index for apartments rose by 9.89% during the year to Q2 2016. Apartment prices rose by 3.71% q-o-q in Q2 2016.

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. In Q2 2016, the economy expanded by 3.1% from a year earlier, up from an annual growth rate of 1.5% in Q1 2016, according to the Federal Statistics Office. The economy is expected to expand by 1.7% this year and by 1.4% next year, after growing by 1.5% in 2015, 1.6% in 2014, 0.4% in 2013 and 0.6% in 2012, according to Bundesbank.

Turkey's housing market remains robust, with house prices in Istanbul rising by 9.67% during the year to Q2 2016. House prices increased 0.36% q-o-q in Q2 2016.

Turkey's housing market was boosted by strong foreign investment and growing population, despite a collapsing currency, dissatisfaction with the government, and geopolitical tensions.

From 2007 to 2011, house prices in Turkey fell by 29% inflation-adjusted as economic growth slowed sharply to 0.7% in 2008, a sudden end to the impressive of 6.8% annual GDP growth during 2002-2007. 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 Turkish housing market finally recovered in 2012, with house prices rising by an average of 8% annually from 2012 to 2015. The economy grew by a striking 4.8% in Q1 2016 from a year earlier, after expanding by 3.8% in 2015, 2.9% in 2014, 4.2% in 2013, 2.1% in 2012, 8.8% in 2011, and 9.2% in 2010. The economy is projected to grow by 3.8% this year, and by another 3.4% in 2017, according to the IMF.

Meanwhile the decline of the Turkish lira against all major currencies, especially the euro, made residential properties more affordable to foreign homebuyers. In just two year, the lira lost about 13.2% of its value against the euro to TRY3.31691 = EUR1 in August 2016. Over the same period, the lira depreciated by almost 27% against the US dollar to TRY2.95954 = USD1.

Malta's property market is performing very well, buoyed by government measures aimed at supporting property demand, such as the Individual Investor Programme and stamp duty exemption for first time homebuyers. Maltese property prices rose by 7.63% during the year to Q2 2016, up from a y-o-y increase of 3.59% a year earlier. Despite this, property prices declined 5.6% q-o-q in Q2 2016.

The Maltese property market enjoyed strong growth from 2000 to 2007, with house prices rising by 53.4%. However, property prices fell with the global financial crisis by 9.1% in 2008, 1.1% in 2009 and another 5% in 2010. After a short-lived recovery in 2011, house prices fell again by 5.2% in 2012. The housing market bounced back in 2013, due to government's launch of new property-related measures. House prices rose by 5.34% in 2013, 4.32% in 2014, and 8.66% in 2015. The economy is expected to expand by 3.6% this year, and by another 3% in 2017, after growing by 6.3% in 2015, 3.7% in 2014, 4.1% in 2013, and 2.8% in 2012, according to the IMF.

Iceland remains strong with house prices rising by 6.34% during the year to Q2 2016, at par with an annual rise of 6.19% a year earlier. This surge can be attributed to strong demand, coupled with limited housing supply, especially in the capital city of Reykjavik. House prices in Iceland increased 1.17% q-o-q in Q2 2016. Iceland's economy is expected to grow by a robust 4.2% this year, after expanding by 4% in 2015, 2% in 2014, 4.4% in 2013, 1.2% in 2012, and 2% in 2011, according to the IMF.

Ireland's house prices continue to rise, albeit at a slower pace, with residential property prices up by 6.27% during the year to end-Q2 2016. During the latest quarter (Q2 2016) Irish house prices dropped slightly by 0.9%.

The Irish economy is now the fastest-growing economy in the EU according to the official GDP growth figure of 26.3% in 2015 (revised up from the previously estimated 7.8% growth) However note that the spectacular revised figure largely reflects tax-based financial alchemy, rather than real growth - if it were real and continued the Irish economy would be larger than China's by 2037! The Irish economy is expected to grow by a healthy 5% this year and by another 3.6% in 2017. Ireland is considered by some to be Europe's austerity star performer, having introduced structural reforms early in the crisis and it is, according to this narrative, now reaping the benefits.

Other strong European housing markets include Riga, Latvia, with house prices rising by 5.61% y-o-y in Q2 2016, followed by Slovak Republic (5.46%), the Netherlands (5.41%), Vilnius, Lithuania (5.28%), and the UK (4.82%). All saw positive quarterly growth during the latest quarter. Also, all performed better in Q2 2016 compared to a year earlier.

European housing markets with minimal house price rises included Portugal with house prices rising by 2.87% during the year to Q2 2016, Tallinn, Estonia (2.75%), Spain (2.22%), Norway (2.04%), Finland (0.92%), and Macedonia (0.72%). All, except Estonia and Macedonia, recorded positive quarterly growth during the latest quarter. All, except Estonia and Norway, showed better performance in Q2 2016 compared to a year earlier.

Russia remains depressed, along with some others

Russia remains the weakest housing market in our global survey, with residential property prices plunging by 12.46% y-o-y in Q2 2016, slightly worse than last year's residential price decline of 11.13%. Russia's house prices fell by 2.27% during the latest quarter.

After a period of soaring consumer prices, inflation has somewhat stabilized, thanks to prudent monetary policies. In July 2016, headline inflation fell to 7.2%, from 7.5% in the previous month and its lowest level since March 2014, according to the Federal State Statistics Service. However, it remains high by international standards. The high inflation rate is the reason for the substantial difference between the nominal y-o-y decline in Russian house prices (-6.03%) and the real decline (-12.46%). The overall inflation rate had surged to 15.5% in 2015, the highest rate since 2002. Inflation is expected to be 8.4% this year, according to the IMF.

In August 2016, crude oil prices stood at US$46.97 per barrel, up by 26.5% from US$37.13 per barrel in December 2015 but still 55.7% down from US$106.1 per barrel in June 2014.

In 2015, Russia's economy experienced its steepest contraction since 2009, with GDP falling by 3.7%, according to the International Monetary Fund (IMF). The economy is expected to contract again by 1.8% this year, amidst international sanctions and low oil prices, according to the Ministry of Economic Development. Russia's currency has collapsed, and interest rates are high.

From the perspective of foreign homebuyers the price decline has been much greater, since the ruble has declined against major currencies. The ruble lost more than 44% of its value against the US dollar in just two years, from an exchange rate of RUB36.20= US$1 in August 2014, to RUB64.87 in August 2016. Over the same period, the ruble depreciated against the euro by almost 34%, from RUB48.18 = EUR1 in August 2014 to RUB72.70 = EUR1 in August 2016.

In Montenegro, prices of dwellings in new residential buildings dropped 10.15% y-o-y in Q2 2016, in sharp contrast with an annual rise of 2.38% in the previous year. On a quarterly basis, house prices dropped 0.78% during the latest quarter. The economy grew by 4.1% last year, its strongest growth since 2008. Economic growth this year is projected to be a healthy 4.7%, according to the IMF.

Other European countries with minimal house price falls included Kiev, Ukraine, with house prices falling by 2.95% during the year to Q2 2016, Greece (-1.95%), and Switzerland (-1.15%). All recorded negative quarterly price changes during the latest quarter (Ukraine, -1.58%; Greece, -2.1%; and Switzerland, -1.36%). Despite this, only Switzerland showed worse performance in Q2 2016 compared to a year earlier.

Asia's housing markets are now two-tiered

Five of the eleven Asian markets for which figures are available saw house price increases during the year to Q2 2016. Six Asian housing markets were stronger in Q2 2016 compared to a year earlier.

China's housing market is now the best performer in our global house price survey, as house prices surged after the government introduced several measures to support the housing market. In Shanghai the price index of second-hand houses surged by 20.38% y-o-y in Q2 2016, the highest annual rise since Q2 2008. During the latest quarter, house prices in Shanghai rose by 6.68%.

Demand is rising strongly again. In June 2016, the value of Shanghai homes sold rose 22% from a year earlier, after a y-o-y rise of 32.9% the previous month, according to the National Bureau of Statistics.

Despite the surge in demand, local real estate experts are quick to warn that housing starts should remain below sales levels for a few years to absorb the overhang of unsold properties 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 downpayment for first-time buyers from 25% to 20%, in an effort to encourage demand. The central bank kept its benchmark one-year lending rate at 4.35%, after cutting it five times in 2015.

The Chinese economy grew by 6.7% y-o-y in Q2 2016, at par with the previous two quarters' 6.8% and 6.7%, respectively, amidst a string of government stimulus measures. The world's second largest economy expanded by 6.9% in 2015, its lowest growth in 25 years.

In Japan, housing prices continued to rise during the year to Q2 2016, despite the weak economy. In Tokyo, the average price of existing condominiums rose by 5.7% during the year to Q2 2016. Residential property prices fell slightly by 0.22% q-o-q in Q2 2016.

Demand continues to rise. Existing condominium sales in Tokyo rose by 4.2% to 19,238 units in H1 2016 from a year earlier, according to The Land Institute of Japan. Likewise, sales of existing detached houses in Tokyo also increased 11.4% to 9,806 units over the same period.

The Japanese economy grew by an annualized rate of just 0.2% in Q2 2016, from a revised 2% growth in Q1 2016, amidst falling exports and weak capital expenditure - an indication that Japanese growth is largely dependent on government stimulus. Japan's economy is expected to grow by 0.5% this year, at par with the previous year's growth.

From the perspective of a US$-based investor, the market's gains were bolstered by the appreciation of the Japanese Yen from 122.967 = US$1 in May 2015, to 101.197 = US$1 in August 2016. However, this was not enough to offset the 31% drop in the value of yen against the dollar from 2012 to 2015.

Asian housing markets with modest to minimal house price rises included Thailand, with house prices rising by 4.38% during the year to Q2 2016, Vietnam (3.58%), and South Korea (1.07%). Thailand and Vietnam recorded positive quarter-on-quarter growth in Q2 2016 of 2.17% and 1.64%, respectively, while South Korea saw a quarterly decline of 0.07%. Only Thailand showed better performance in Q2 2016 compared to the previous year.

Some Asian housing markets are struggling

House prices fell in six of the eleven Asian markets for which figures were available during the year to Q2 2016.

Hong Kong's housing market is now the weakest housing market in Asia and the third worst performer in our global house price survey. Residential property prices fell by 10.73% during the year to Q2 2016, in sharp contrast with the 16.88% y-o-y rise a year earlier. House prices increased 2.68% q-o-q in Q2 2016.

The number of property transactions fell by 11.6% y-o-y to just 13,700 in the second quarter of 2016, according to the Ratings and Valuation Department (RVD), while sales values dropped 8.7% y-o-y to HK$108 billion (US$13.93 billion) over the same period. Hong Kong's economy grew 1.7% in Q2 2016 from a year earlier, according to the Census and Statistics Department. The economy is expected to grow by around 1% to 2% this year, after 2.4% in 2015, 2.6% in 2014 and 3.1% in 2013.

Mongolia's housing market remains depressed, amidst a sharp economic slowdown. Nationwide, house prices plunged by 10.55% during the year to Q2 2016. House prices dropped 3.21% during the latest quarter.

Mongolia's economy grew by just 2.3% in 2015, sharply down from GDP growth rates of 7.9% in 2014, 11.6% in 2013, 12.3% in 2012, 17.3% in 2011, and 7.3% in 2010. The economy is projected to expand by a meagre 0.4% this year, amidst mounting external debt, falling budget revenues and low commodity prices.

Taiwan's nationwide house prices fell 4.58% y-o-y in Q2 2016, after an annual decline of 2.16% in a year earlier, mainly due to the government's housing market cooling measures - its fifth consecutive quarter of annual declines since 2008. During the latest quarter (Q2 2016) house price rose 1.59%.

House prices in Taiwan are expected to fall further in the second half of 2016, by between 2% and 10%, according to local property experts. Taiwan's economy grew by a meagre 0.69% in Q2 2016, after contracting by 0.89% in Q4 2015 and by another 0.68% in Q1 2016, according to the Directorate-General of Budget, Accounting and Statistics (DGBAS). The economy grew by just 0.65% in 2015, the weakest annual growth since 2009. GDP growth is expected to be 1.06% this year, according to DGBAS estimates.

Singapore's housing market is still weak. House prices fell by 2.94% during the year to Q2 2016, and by 1.21% q-o-q during the latest quarter.

Demand is now rising. There were 2,256 new private residential units sold in Q2 2016, up 59% the previous quarter and 6.6% higher than a year earlier, according to the Urban Redevelopment Authority. Supply is also increasing. The number of uncompleted private residential units launched increased 13% y-o-y to 2,371 y-o-y units in Q2 2016.

Singapore's economy expanded by 2.2% y-o-y in Q2 2016, slightly up from 2.1% in Q1 2016 and 1.8% in Q4 2015, according to the Monetary Authority of Singapore. GDP growth was 2% in 2015, 3.3% in 2014, and 4.7% in 2013.

In the Philippines, the average price of 3-bedroom condominium units in Makati CBD rose by 2.86% during the year to Q2 2016, but fell 3.9% q-o-q during Q2 2016.

Makati CBD property prices soared by 28.3% from Q1 2011 to Q4 2015, amidst rapid economic growth. The Philippine economy grew by 7% in Q2 2016 from a year earlier, up from GDP growth rates of 6.9% in Q1 2016, 6.5% in Q4 2015, 6% in Q3 2015, 5.8% in Q2 2015, and 5% in Q1 2015. The economy is projected to grow by 6% in 2016 and another 6.2% in 2017, according to the IMF.

In Indonesia, residential prices in the country's 14 largest cities fell by 0.35% y-o-y in Q2 2016, but increased slightly by 0.34% q-o-q during the latest quarter.

Demand continues to weaken sharply and total supply growth is expected to slow in the coming years. In an effort to attract foreign investors, the Indonesian government unveiled last year a plan to finally allow foreigners to purchase luxury apartments in the country.

Indonesia's economy grew by 5.18% y-o-y in Q2 2016, slightly up from 4.92% in Q1 2016 and 5.04% in Q4 2015. The economy is expected to grow by 4.9% this year, after a 4.8% expansion in 2015.

U.S. housing market remains strong

The U.S. housing market remains strong, despite a slowdown in the economic recovery. The S&P/Case-Shiller seasonally-adjusted national home price index rose by 4% during the year to Q2 2016 (inflation-adjusted). House prices increased by 1.89% during the latest quarter. The Federal Housing Finance Agency's seasonally-adjusted purchase-only U.S. house price index, rose by 4.34% during the year to Q2 2016 (inflation-adjusted), and was almost unchanged in Q1 2016 from the previous 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 11.4% y-o-y in Q2 2016, followed by Seattle (9.9%), Denver (8.1%), Dallas (7.9%), Tampa (6.9%), Miami (5.8%), San Diego (5.4%), San Francisco (5.4%), Atlanta (4.8%), and Las Vegas (4.6%).

Washington and New York saw the lowest growth in house prices, at 1%.
Residential construction continues to rise modestly. New privately-owned housing units authorized rose by 0.9% y-o-y in July 2016, according to the U.S. Census Bureau, and housing starts rose by 5.6%, while completions rose by 3.2% to 1,026,000 units.

Demand is surging. New house sales were up by 31.3% to a seasonally adjusted annual rate of 654,000 units in July 2016 from the same period last year, according to the U.S. Census Bureau. There were about 233,000 units for sale by July 2016, about 8.4% up from a year earlier.

Homebuilders remain bullish, amidst a shortage of existing homes for sale. U.S. home builder sentiment stood at 60 in August 2016, up from 58 in July, 60 in June, and 58 in May 2016, according to the National Association of Home Builders. A reading of 50 is the midpoint between positive and negative sentiments.

In the second quarter of 2016, the U.S. economy grew by a lower-than-expected annualized rate of 1.2%, after growth of 0.8% in Q1 2016, 1.4% in Q4 2015, 2% in Q3 2015, 3.9% in Q2 2015 and 0.6% in Q1 2015, with exports and investment weaker because of the strong dollar and lower oil prices, 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 grow by just 2% this year.

Canada's house prices surging

Despite repeated market-cooling measures, house prices in Canada's eleven major cities rose by an amazing 8.4% during the year to Q2 2016, up from 4% the previous year and the biggest annual increase since Q2 2010. House prices increased 4.41% q-o-q in Q2 2016.

Biggest rises: Vancouver saw the biggest inflation-adjusted house price increases of 21.5% y-o-y in Q2 2016, followed by Hamilton (12.1%), Victoria (10.8%), and Toronto (10.7%). Winnipeg saw meagre growth of 0.2%.

Biggest falls: Calgary recorded the biggest price drop of 3.9% during the year to Q2 2016, followed by Edmonton (-3.4%), Quebec (-2.9%), Halifax (-2.2%), Montreal (-1%), and Ottawa (-0.1%).

Home sales dropped 2.9% in July 2016 compared to the same period last year, the largest decline since April 2013, according to the Canadian Real Estate Association (CREA). Sales were down from a year earlier in about 60% of all local markets, led by Greater Vancouver, the Fraser Valley, Calgary, and Edmonton.

There were about 4.6 months of inventory on a national basis in July 2016, the lowest level in more than 6 years and an indication that the housing market, especially in British Columbia and Ontario, is increasingly becoming tight.

The Bank of Canada held its key interest rate unchanged at 0.50% in July 2016, after cutting it twice last year in response to plunging oil prices and worsening economic prospects. The key rate had been 1% between September 2010 and December 2014. The central bank will likely hold the key rate unchanged until the first quarter of 2018, given that the economy is still struggling.

Canada's economy shrank by an annualized rate of 1.6% in Q2 2016, the biggest decline since Q2 2009, amidst a decline in exports, especially for energy products, according to Statistics Canada. Battered by the oil price decline Canada's economy grew just 1.2% last year, less than half the 2.5% growth seen in 2014. The economy is expected to expand by 1.5% this year and by 1.9% in 2017, according to the IMF.

Middle East's housing markets losing steam

Of the four Middle Eastern housing markets included in our global survey, all, except UAE, performed worse in Q2 2016 than the previous year. Two countries saw modest house price growth during the year to Q2 2016, while the other two experienced sharp declines in house prices.

Israel's housing market is softening sharply, amidst economic slowdown. The nationwide average price of owner-occupied dwellings rose by 3.29% during the year to Q2 2016, a slowdown from a y-o-y rise of 7.66% a year ago and the lowest annual increase since Q1 2014. House prices actually dropped 1.8% q-o-q in Q2 2016.

Demand is also waning. After a more than 40% growth in 2015, new dwelling sales increased by just 3.7% y-o-y to 8,292 units in the first three months of 2016, according to the Central Bureau of Statistics (CBS). The number of new dwellings for sale increased 1.7% to 26,725 units in March 2016 from a year earlier. Dwelling starts rose by 3.9% y-o-y to 47,746 units in 2015 while dwelling completions dropped 2.8% to 43,399 units over the same period.

Israel's economy grew by an annualized rate of 3.7% in Q2 2016, from 2.2% in the previous quarter, amidst strong private consumption and fixed asset investment. The economy is expected to expand by 2.4% this year, after growing by 2.6% for both 2014 and 2015, 3.3% in 2013, 2.9% in 2012, and 5% in 2011, according to the Bank of Israel. The Bank of Israel kept its benchmark interest rate at a record low of 0.1 in August 2016, in an effort to boost economic growth while maintaining price and financial stability.

Qatar's property market is now weakening rapidly, amidst economic slowdown. The nationwide real estate price index rose by a meager 1.29% during the year to Q2 2016, sharply down from y-o-y rises of 9.38% in Q1 2016, 10.76% in Q4 2015, 16.3% in Q3 2015, 21.47% in Q2 2015, and 27.81% in Q1 2015. Property prices fell by 3.84% q-o-q during the latest quarter.

Property demand in Qatar remains strong in the first six months of 2016 after the value of real estate transactions reached an all-time high in 2015, boosted by sustainable economic and population growth, and a construction boom in preparation for the 2022 FIFA World Cup. The economy is expected to expand by a modest 3.4% this year, after growing by an annual average of 4.2% in 2012-15, and 15.7% in 2008-11, according to the IMF.

Dubai's residential property prices plunged by 5.79% during the year to Q2 2016, from a y-o-y decline of 11.72% in Q2 2015 and its sixth consecutive quarter of annual declines. House prices fell by 0.63% 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 to slow in the second half of 2014, amidst housing oversupply, subdued demand and slower economic activity.

The total number real estate transactions rose by 22.8% y-o-y to 28,251 units in the first half of 2016 while the value of transactions dropped 12.4% to AED113 billion (US$ billion), according to Dubai Land Department. 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 by 10% this year, amidst weaker investor sentiment and weak economic growth, according to Standard & Poor's.

UAE's economic growth is projected to slow to 2.4% this year, after GDP growth of 3.9% in 2015, 4.6% in 2014, 4.3% in 2013, 7.2% in 2012 and 4.9% in 2011, according to the IMF. This is due to lower oil prices, slowing 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 11.2% during the year to Q2 2016. This is in sharp contrast with the rise of 0.9% in the same period last year. House prices plunged by 15.44% during the latest quarter.

Egypt's economy grew by 4.2% in 2015, the highest growth in 5 years, on the back of a political environment which is apparently more stable due to high levels of political repression, large donations from Gulf Cooperation Council (GCC) allies and improving business sentiment, according to the IMF. Economic growth is projected to slow to just 1.2% this year, its weakest in 7 years, because of the cumulative impact of low oil prices and government spending cuts.

In an effort to buoy the property market, President Abdel Fattah el-Sisi 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.

New Zealand's housing market growing strongly

New Zealand's housing market was the second best performer in our global house price survey. Nationwide median house prices rose by 10.43% during the year to Q2 2016, sharply up from a y-o-y increase of 5.19% during the same period last year. House prices rose by 0.58% q-o-q during Q2 2016.

Total dwellings sold were 7,299 units in July 2016, down by 10% from a year earlier, according to the Real Estate Institute of New Zealand (REINZ). Sales volumes declined in most of New Zealand's ten regions, with Auckland registering the biggest y-o-y drop of 20.3% in July 2016, followed by Waikato/BOP (14.4%). The decline in sales can be mainly attributed to a shortage of housing inventory, with a 33% y-o-y decline in properties available for sale in July 2016 (six regions had housing inventory declines of over 40%).

New dwelling consents rose by 13.1% to 16,833 units in the first seven months of 2016 from the same period last year, according to Statistics New Zealand. Consents for new houses, which increased by almost 17% over the same period, accounted for 72% of all dwelling consents.

New Zealand's economy is projected to expand by just 2% this year, after growing by 3.4% in 2015, 3% in 2014, and 1.7% in 2013, according to the IMF. The Reserve Bank of New Zealand (RBNZ) reduced its official cash rate (OCR) by 25 basis points to 2% in August 2016, after cutting it five times in the past 14 months, in an effort to boost economic growth amidst low inflation.

Mexico's housing market stronger, but Brazil and Chile continue to deteriorate

Mexico's housing market continues to grow stronger, buoyed by strong foreign demand in resort communities. The nationwide house price index rose by 5.32% y-o-y in Q2 2016, up from 3.43% during the same period last year. During the latest quarter (Q2 2016) house prices rose by 2.45%.

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. French, Italians, and Spanish homebuyers are also increasing. In 2015, Mexico's peso slumped by about 15% against the US dollar, the biggest annual decline since 2008. In August 2016, the peso depreciated further, and was 10.3% down on a year earlier, at an exchange rate of MXN18.46 = USD1.

The Mexican economy grew by 2.5% year-on-year in Q2 2016, according to the Instituto Nacional de Estadistica y Geografia (INEGI). However on a quarterly basis, the economy actually contracted 0.2% in Q2 2016, the first contraction since Q2 2013, primarily due to a decline in industrial output. The economy is expected to expand by 2.4% this year, after 2.5% last year, 2.3% in 2014, and 1.3% in 2013.

Brazil's housing market remains depressed, amidst the ongoing economic crisis and an uncertain political landscape. In Sao Paulo, house prices fell by 7.59% during the year to Q2 2016, worse than the 3.52% decline seen in a year earlier and the sixth consecutive quarter of falling house prices. Quarter-on-quarter, house prices dropped 1.58% in Q2 2016.

Brazil's economy remains in deep recession and unemployment is at record high. The economy shrank by 3.8% in Q2 2016 from a year earlier, having shrunk every quarter since Q2 2014 - the country's worst and longest recession in more than a century.

Worse, the country is in the midst of immense political turmoil. In August 2016, Michel Temer was sworn in as Brazil's new president after the Senate voted to remove former President Dilma Rousseff, amidst the massive Petrobras corruption scandal. Unemployment rose to 11.3% in Q2 2016, sharply up from 6.5% two years ago, according to the country's statistics agency, IBGE. Fitch Ratings recently downgraded Brazil's sovereign rating into junk, in line with the other two major rating companies.

The economy is expected to contract by 3.8% this year, after a contraction of 3.8% in 2015, and growth of 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.

By December 2015, the Brazilian Real (BRL) had lost about 32% of its value against the U.S. dollar to reach an average monthly exchange rate of BRL3.88 = USD1 as compared to BR2.64 = USD1 in December 2014. However in the first eight months of 2016, the real recovered almost 26.5% to reach BRL3.21 = USD1, largely in response to the formation of a new government.

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 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. The key rate has remained unchanged since.

Chile's housing market is also down, with the average price of new apartments in Greater Santiago falling by 1.36% during the year to Q2 2016, in contrast with an annual rise of 2.93% a year earlier. During the latest quarter house prices (Q2 2016) house prices dropped 2.62%.

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 purchasing and reselling properties in a span of less than one year. Chile's economy is expected to expand by 1.5% this year, and by another 2.1% in 2017, after growing by 2.1% in 2015, 1.8% in 2014, and 4% in 2013, according to the IMF.

South Africa's housing market remains very weak

South Africa's price index for medium-sized apartments fell by 0.32% during the year to Q2 2016, its fourth quarter of annual price declines. On a quarterly basis, house prices dropped slightly by 0.05% in Q2 2016.

House prices are expected to continue falling during the remainder of 2016, amidst the continued weakness of the rand, falling foreign investor confidence, and uncertain economic conditions, according to local property experts.

South Africa's economy shrank 1.2% in Q1 2016, following an increase of 0.4% in the last quarter of 2015. Last year, the economy grew by about 1.3%, its slowest growth since the country emerged from recession in 2009. The economy is expected to slow further, with real GDP growth estimated at 0.6% this year, amidst severe drought, rising inflation, and declining exports, according to the IMF.

The South African Reserve Bank (SARB), the country's central bank, held its benchmark repurchase rate at 7% in July 2016, after raising it by a cumulative 75 basis points in the first four months of this year, in an effort to stop the rand from depreciating further and to contain inflationary pressures. In January 2016, the rand was 29.3% down on a year earlier, but in recent months the rand has partially reversed its losses, rallying to 10-month high against the US dollar, with a monthly average exchange rate of ZAR13.78 = USD1 in August 2016.

References:
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The Global Property Guide is a research house and web site dedicated to residential property, covering market trends in 101 countries. The full contents of this press release can be re-published. Web sites are required to link to the Global Property Guide

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