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Press Release

House prices surge across Europe and China, and there's vibrant growth in Canada, New Zealand and parts of North Asia

Mar 23, 2017


Outside China, Europe is the epicentre of today's house price boom, with house prices rising during 2016 in no less than 18 of the 23 European housing markets for which we have figures. House price rises have also been strong in Canada, New Zealand and parts of Asia.

The five strongest housing markets in our global house price survey for the full year 2016 were: China (+21.34%), Iceland (+12.53%), Romania (+11.01%), Canada (+10.66%), and New Zealand (+9.47%).

During 2016, according to Global Property Guide research, house prices rose in 29 out of the 45 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 32 countries, and declines in 13 countries.

The biggest y-o-y house-price declines were in Montenegro (-12.95%), Russia (-9.27%), Qatar (-5.69%), Brazil (-5.51%), and Mongolia (-4.85%).

Momentum. During 2016, 25 of the world's housing markets for which figures are available showed stronger upward momentum, while 20 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). The momentum data show clearly that the global housing boom is still getting stronger.

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

Source: Various series, data descriptions and sources here

Analysis by continent: Europe super-vibrant

European house price rises continue unabated. Two of the three strongest housing markets in our global survey are in Europe, with rising house prices in no less than 18 of the 23 European housing markets for which figures were available during 2016.

Iceland is now the strongest housing market in Europe and second best performer in our global survey, amidst strong economic growth. Nationwide house prices rose by 12.53% during 2016, far above 2015's rise of 6.93%. This surge can be attributed to strong demand, coupled with limited housing supply, especially in the capital city of Reykjavik. Quarter-on-quarter, house prices in Iceland increased 4.04% q-o-q in Q4 2016.

Romania's average apartment price rose by 11.01% during 2016, due to a strong economy, after rising 7.74% in 2015. Prices fell slightly during the latest quarter (Q4 2016), falling by 0.26% q-o-q.

Ireland's house prices continue to rise, fuelled by robust economic growth. Residential property prices rose 8.15% during 2016, after rising 4.47% in 2015. During the latest quarter, Irish house prices rose 1.85% q-o-q.

Estonia Average apartment prices in Tallinn continue their long upward march, rising by 7.36% during 2016, after rising 4.59% in 2015. Quarter-on-quarter, house prices in the capital rose by 1.4% in Q4 2016.

Germany's housing market remains buoyant. The price index for apartments rose by 6.86% during 2016, after rising 7.62% in 2015. Apartment prices rose slightly by 0.89% q-o-q in Q4 2016.

Other strong European housing markets included Norway, with house prices rising by 6.38% in 2016, followed by Slovak Republic (6%), Riga, Latvia (5.85%), Vilnius, Lithuania (5.07%), Sweden (4.6%), and the Netherlands (4.37%). However of these, only the Slovak Republic and Lithuania saw positive quarterly growth during the latest quarter. All, except Sweden, rose more in 2016 than the previous year.

Somewhat weaker European housing markets included Portugal  with house prices rising by 3.88% in 2016, Istanbul, Turkey (3.4%), the UK (3.28%), France (1.31%), Finland (0.39%), Spain (0.1%), and Greece (0.03%).

Europe's weakest housing markets. Montenegro was the weakest housing market in our global survey. The price of dwellings in new residential buildings fell by 12.95% during 2016, a sharp turnaround from annual growth of 6.91% the previous year. House prices dropped by a huge 7.17% during the latest quarter. The sharp decline in house prices comes as a surprise because Montenegro is experiencing strong economic growth, increasing tourism, and because a law in 2015 allowed foreign buyers to obtain a residency permit upon purchase of a property. The house-price decline is likely related to weaker Russian buying interest.

Russia remains depressed, amidst struggling economy. Residential property prices plunged by 9.27% in 2016, a little better than last year's decline of 15.35%. Russia's house prices fell by 1.37% during the latest quarter,

Other European countries with house price falls included Kiev, Ukraine, with house prices falling by 3.34% in 2016, Macedonia (-0.95%), and Switzerland (-0.94).

Asia: China remains the best performer in our global house price survey

China was the world's strongest housing market in 2016, boosted by an earlier economic stimulus, while Japan's markets rose impressively. After a lacklustre performance the previous year, Hong Kong also rose strongly. Vietnam continued to post modest house price growth.

China's house prices surged after measures to support the housing market were introduced by the government. In Shanghai the price index of second-hand houses rose by 21.34% in 2016, a sharp improvement from a rise of 9.31% a year earlier and the highest annual rise since 2007. During the latest quarter, house prices in Shanghai rose by 1.48%.

However, house price rises in other Chinese cities are more muted. In Beijing, for instance, the price index for second-hand residential buildings rose by just 5.49% in 2016 from a year earlier, significantly lower than the double-digit price increases seen in Shanghai. House prices in Beijing increased 1.28% q-o-q in Q4 2016.

Japan's housing market rose strongly in 2016, despite a weak economy. In Tokyo, the average price of existing condominiums rose by 9.32% in 2016 from a year earlier, a sharp improvement from a meagre growth of 1.01% in the previous year. Residential property prices in the capital city increased 1.16% q-o-q in Q4 2016.

Hong Kong's residential property prices rose by 6.4% in 2016, after rising only 0.11% the previous year. During the latest quarter (Q4 2016), house prices rose by 2.88%.

Vietnam's housing market is gaining momentum, with property prices rising by 2.89% in 2016, after weak performances in recent years. However, Vietnamese house prices declined 0.23% q-o-q in Q4 2016.

Other Asian housing markets have lost steam. House prices fell in six of the ten Asian markets for which figures were available during 2016.

Mongolia had Asia's weakest housing market, despite signs of improvement. Nationwide house prices fell by 4.85% during 2016, after falling 10.22% in 2014 and 12.24% in 2015. House prices fell 0.84% during the latest quarter.

Singapore's housing market is still weak, amidst a fragile economy. House prices fell by 3.31% in 2016, largely the result of measures to curb speculation. House prices fell by 0.71% q-o-q during the latest quarter.

Taiwan's nationwide house prices fell by 3.01% in 2016, after falling 4.39% in 2015. House prices fell 1.78% q-o-q in Q4 2016.

Thailand's property market is losing steam, amidst weak economy, low investor confidence, and tighter lending rules. Nationwide house prices dropped 1.07% in 2016, after rising 1.98% in 2015. House prices fell by 2.08% q-o-q during Q4 2016.

In Indonesia, residential prices in the country's 14 largest cities fell by 0.89% during 2016, after falling 0.2% in 2015. House prices fell 0.37% q-o-q during the latest quarter.

South Korea's housing market is also weak, with the nationwide housing purchase price index falling slightly by 0.52% during 2016, after rising 2.25% the previous year. House prices increased 0.29% q-o-q during the latest quarter.

US house price rises moderating, while Canadian house prices are surging

The pace of price-rises in the U.S. housing market is slowing gradually, despite improving economic prospects. Canada meanwhile is in the middle of a house price boom.

The S&P/Case-Shiller seasonally-adjusted national home price index rose by 3.71% during 2016 (inflation-adjusted), the slowest pace since 2011. House prices increased by 0.55% 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 4.07% in 2016 (inflation-adjusted), down from an increase of 5.45% in 2015. The index dropped 0.15% in Q4 2016.

Canada's housing market rose strongly, despite repeated market-cooling measures. House prices in Canada's eleven major cities surged by 10.66% during 2016, more than double the 4.52% rise the previous year and the biggest annual increase since 2006. House prices increased 1.13% q-o-q in Q4 2016.

Latin America's housing markets continue to decelerate

Brazil's housing market continues to struggle. In Sao Paulo, house prices fell by 5.51% during 2016, after falling 7.37% in 2015. Quarter-on-quarter, house prices dropped 0.41% in Q4 2016, the ninth consecutive quarter of falling house prices.

Chile's housing market has weakened, with Greater Santiago average new apartment prices falling by 1.82% in 2016, in contrast with a rise of 4.4% in 2015. On a quarterly basis, house prices fell 3.69% in Q4 2016.

Mexico's nationwide house price index rose by 4.07% in 2016, a slight slowdown from an annual rise of 4.36% in the previous year. On a quarterly basis, house prices dropped 1.5% in Q4 2016.

Middle Eastern housing markets mixed

Israel and Egypt saw house price rises during 2016, while prices fell in Qatar and UAE.

Israel's house prices continue to head upwards, with the nationwide average price of owner-occupied dwellings rising by 5.36% during 2016, after rising 6.88% in 2015, 7.41% in 2014, 5.38% in 2013, and 4.12% in 2012. House prices increased 1.79% q-o-q in Q4 2016.

Egypt's housing market is now recovering, with the nationwide real estate index rising by 1.19% during 2016, after a decline 14.22% in 2015. However, house prices fell 4.44% during the latest quarter.

Qatar is the third weakest housing market in our global survey, amidst economic slowdown. The nationwide real estate price index fell 5.69% during 2016, a sharp turnaround from the increase of 10.76% the previous year. However property prices increased 5.19% q-o-q during the latest quarter.

Dubai's residential property prices fell 1.64% in 2016, but this was a significant improvement from the 14.1% fall in 2015. House prices dropped slightly by 0.26% during the latest quarter.

New Zealand's house price rises are accelerating again, as post-earthquake rebuilding is bolstering the housing market. The nationwide median house prices rose by 9.47% during 2016, a sharp increase from a rise of 3.24% during the previous year. However, house prices dropped slightly by 0.22% q-o-q during Q4 2016.

Source: Various series, data descriptions and sources here

Detailed country-by-country analysis:

Europe

Two of the three strongest housing markets in our global survey are in Europe. House prices rose in 18 of the 23 European housing markets for which figures were available during 2016.

Iceland is now the strongest housing market in Europe and second best performer in our global survey, amidst strong economic growth.

Iceland saw a housing boom from 2002 to 2007, with house prices surging by more than 73%. However house prices plunged by 32.5% from early-2008 to 2010, due to Iceland's extreme exposure to the global crisis. The housing market was quiet during the next three years, with house prices rising by a meagre 5%. Fuelled by growing demand, Iceland saw strong house price rises of 5.18% in 2014 and 6.93% in 2015, and 12.53% during 2016. This surge can be attributed to strong demand coupled with limited housing supply, especially in the capital city of Reykjavik. Quarter-on-quarter, house prices in Iceland increased 4.04% q-o-q in Q4 2016.

Iceland's economy was estimated to have grown by 5.9% in 2016, after expanding by 4% in 2015, 2% in 2014, 4.4% in 2013, 1.2% in 2012, and 2% in 2011, according to Statistics Iceland. The economy is expected to expand by 4.3% this year.

Romania's housing market continues to perform well, amidst strong economic growth and a construction boom. The average selling price of apartments rose by 11.01% during 2016, an improvement from a rise of 7.74% in 2015.

Romania's strong performance in the past two years is something of a rebound from dramatic price falls in previous years, but is also driven by strong economic growth.

House prices plunged by 24.22% in 2009, 22.08% in 2010, 6.99% in 2011, 5.96% in 2012, 10.43% in 2013, and 1.59% in 2014. It was only in 2015 that the housing market began to recover. The Romanian economy expanded by a robust 4.8% in 2016, up from 3.9% growth in 2015, in contrast to almost zero growth between 2009 and 2014. Romania's economy is expected to grow by a healthy 4.4% this year, according to the European Commission.

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.

Residential property prices were up by 8.15% during 2016, after an increase of 4.47% in 2015. On a quarterly basis, Irish house prices increased 1.85 in Q4 2016.

The Irish economy is estimated to have grown by a healthy 4.3% last year, after growth rates of 26.3% in 2015, 8.5% in 2014, and 1.1% in 2013, according to the European Commission. Despite increased uncertainties related to Brexit and future US tax and trade policies, the economy is expected to remain firm this year with GDP growth of 3.4%.

Estonia. Average apartment prices in Tallinn rose by 7.36% during 2016, after rising 4.59% in 2015, 12.63% in 2014, 16.55% in 2013, 1.59% in 2012 and 8.33% in 2011.

Quarter-on-quarter, house prices in the capital rose by 1.4% in Q4 2016. The number of purchase-sale contracts of real estate increased 2% in 2016, while transaction values were up by 3.4%, according to Statistics Estonia. Estonia's economy grew by just around 1.5% last year, after growing 1.1% in 2015. The economy is expected to expand by 2.5% this year and by another 2.9% in 2018.

Germany. 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 German economy expanded by 1.9% in 2016, its strongest performance in five years and the fastest growth among the G7 states. Europe's largest economy is expected to expand by 1.6% this year, according to the European Commission.

Germany's housing market is now buoyant. The price index for apartments rose by 6.86% during 2016, after annual rises of 7.62% in 2015, 1.83% in 2014, 3.69% in 2013, 0.15% in 2012, and 3.39% in 2011. Apartment prices rose slightly by 0.89% q-o-q in Q4 2016.

Other strong European housing markets included Norway, with house prices rising by 6.38% in 2016, followed by Slovak Republic (6%), Riga, Latvia (5.85%), Vilnius, Lithuania (5.07%), Sweden (4.6%), and Netherlands (4.37%). However, only Slovak Republic and Lithuania saw positive quarterly growth during the latest quarter. All, except Sweden, rose more in 2016 compared to a year earlier.

European housing markets with smaller house price rises included Portugal with house prices rising by 3.88% in 2016, Istanbul, Turkey (3.4%), UK (3.28%), France (1.31%), Finland (0.39%), Spain (0.1%), and Greece (0.03%). Only Portugal and France recorded positive quarterly growth during the latest quarter. All, except Portugal, Turkey, and the UK, rose more in 2016 as compared to a year earlier.

European countries with slight house price falls included Kiev, Ukraine, with house prices falling by 3.34% in 2016, Macedonia (-0.95%), and Switzerland (-0.94%). Switzerland recorded positive quarterly price change of 0.25% during the latest quarter. In contrast, Macedonia and Ukraine saw negative quarterly price changes of 1.24% and 0.39%, respectively. All performed worse in 2016 compared to a year earlier.

Europe has the two weakest housing markets in our survey: Russia and Montenegro

Montenegro is now the weakest housing market in our global survey, which is surprising, because Montenegro's economy has experienced its fastest economic growth since 2008, growing by more than 5% last year, though growth is expected to slow to 3.6% this year, according to the IMF.

The housing slowdown is likely caused by weak Russian buyer interest. The price of dwellings in new residential buildings fell by 12.95% during 2016, a sharp turnaround from the previous year's house price rise of 6.91%. House prices dropped by a huge 7.17% during the latest quarter.

Russia. Russia's high inflation rate is the reason for the substantial difference between the nominal decline in Russian house prices (-4.09%) and the real decline (-9.27%). However, this is better than last year's house price decline of 15.35%. Russia's house prices fell by 1.37% during the latest quarter.

From the perspective of foreigners the decline in the value of Russian property has been much greater. The ruble has lost almost 47% of its value against the US dollar in just three years, from an exchange rate of RUB32.871= US$1 in December 2013, to RUB61.95 in December 2016.

Interest rates are high. In February 2017, crude oil prices were still 48.2% down from US$106.1 per barrel in June 2014. However in 2016, Russia's economy showed some signs of improvement, with GDP falling by just 0.2%, after contracting by 3.7% in 2015, according to the IMF. Inflation was 5% in January 2017, and is expected to have slowed to 4% by end-2017. The Russian economy is expected to grow by 1% this year and by another 1.2% in 2018, according to the IMF.

References:
Description:
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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