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Press Release

Q1 2013: Global housing markets now in full scale boom

Jun 17, 2013


A dramatic picture of house prices rising around the world is revealed by the latest Global Property Guide house price survey, for the year to the 1st quarter of 2013. This is the most significant global acceleration in house prices since the boom years of 2006/7.

Using inflation-adjusted figures, the Global Property Guide’s survey reveals that house prices rose in 28 of 42 housing markets which have so far published housing statistics. But the nominal figures (with which the public is more familiar, see table 2) show the depth and breadth of the boom: in the first quarter of 2013, nominal house prices rose in 30 countries, and fell in only 12 countries.

Inflation is particularly high in several countries with high nominal annual house price rises (India, Brazil, Turkey, South Africa), so the two sets of figures are very different.

Regional snapshots:

  • U.S. housing market has been rising strongly. House price rises are accelerating. The S&P/Case-Shiller seasonally-adjusted national home price index soared 8.31% during the year to end-Q1 2013, the biggest year-on-year increase since Q1 2006. As a reminder, these figures are adjusted for inflation, as are all subsequent figures, except those for the Ukraine. Over the same period, the FHFA's seasonally-adjusted purchase-only house price index rose by 4.93%, its fourth quarter of year-on-year gains. Consumer confidence is at a five-year high, construction activity is picking up, and foreclosures and delinquency rates are falling.
  • More European housing markets are showing signs of recovery. In Turkey, house prices rose by 8.13% during the year to Q1 2013, in sharp contrast with the 1.55% year-on-year decline seen in Q1 2012. In Denmark, house prices also increased by 7.01% year-on-year in Q1 2013, after annual growth rates of 6.84% in Q4 2012 and 3.25% in Q3 and declines of 4.12% in Q2 and 5.52% in Q1. Other strong European housing markets included Norway, with house prices rising by 4.75% during the year to Q1 2013, Estonia (4.2%), Poland (3.24%), Sweden (3.11%), and Switzerland (2.42%).
  • Asian housing markets remain buoyant. In Hong Kong, house prices surged 20.14% year-on-year in Q1 2013, far higher than the 2.11% annual increase seen during the equivalent period last year. In Delhi, India, house prices rose by 7.61% during the year to Q1 2013, from year-on-year increases of 6.05% in Q4 2012, 5.31% in Q3, 6.23% in Q2 and 24.41% in Q1 2012. During the year to Q1 2013, house prices also increased in Beijing, China (5.92%), in Greater Taipei, Taiwan (3.24%), in Makati CBD, Philippines (2.34%), Tokyo, Japan (2.12%), Indonesia (2.04%), and Thailand (1.48%). Only Singapore saw its house prices decline by 0.58% over the same period.
  • Pacific housing markets’ upward momentum continues. New Zealand's median house prices rose by 7.23% during the year to Q1 2013, in sharp contrast with year-on-year decline of 0.2% in Q1 2012. In addition, Australia's housing market is also recovering, with house prices in the country's eight major cities rising by 0.11% during the year to Q1 2013, its second consecutive quarter of year-on-year growth.
  • The Middle East’s housing markets remain strong. Dubai, UAE, is the world’s best performer. Dubai’s house prices soared by 28.02% during the year to Q1 2013, in sharp contrast with the 1.01% year-on-year decline seen during the same period last year. Likewise in Israel, the average price of owner-occupied dwellings rose by 6.34% during the year to Q1 2013, after year-on-year increases of 4.12% in Q4 2012 and 3.14% in Q3 in 2012, and declines of 0.46% in Q2 and 3.33% in Q1 2012.
  • South Africa’s housing market has been recovering. In South Africa, the price index for medium-sized apartments rose by 3.09% during the year to end-Q1 2013, its second consecutive quarter of year-on-year increase.

The recovery remains weak in one part of the world:

  • Some European housing markets remain depressed. Greece remains the world's weakest housing market in Q1 2013, with house prices falling by 11.53% during the year to Q1 2013. Over the same period, house price falls have been accelerating in the Netherlands (-11%), Spain (-10.24%), Zagreb, Croatia (-9.53%) and Russia (-8.09%). Indeed, the thirteen weakest markets in our global survey were all in Europe.

Momentum: 27 housing markets showed better performance in the first quarter of 2013, in momentum terms, than the same period last year, while only 15 housing markets showed weaker momentum.

Conclusion: The latest house price figures obviously show that the global housing slump is finally over. House prices are rising in more countries than not, and the momentum trend is clearly upwards.

Source: Various series, data descriptions and sources here

Boomtime for the U.S. housing market!

In the United States, house price rises accelerated in Q1 2013, despite a weakening economy. The S&P/Case-Shiller seasonally-adjusted national home price index soared by 8.31% during the year to end-Q1 2013, the biggest year-on-year increase since Q1 2006. Quarter-on-quarter, the national home price index rose by 3.3% in Q1 2013. The housing recovery was led by Phoenix, but all of the 20 U.S. major cities registered strong year-on-year house price increases in Q1 2013

The FHFA’s house price indices were also encouraging. The U.S. seasonally-adjusted purchase-only house price index rose by 4.93% year-on-year to Q1 2013, its fourth quarter of year-on-year gains and the highest growth seen since Q2 2006. On a quarterly basis, the index increased by 1.32% quarter-on-quarter in Q1 2013.

Demand is rising sharply. The total number of houses sold in the country increased by 26.4% year-on-year in Q1 2013, to about 153,000 units, based on figures from the U.S. Census Bureau.

Residential construction activity is picking up. In Q1 2013, the number of house building permits authorized soared by 20.3% year-on-year, to 205,500 units. Over the same period, the total number of housing units started also soared by 35.1% to 209,300 units, and the number of housing units under construction increased by 29.9% to 583,700 units. U.S. home builder sentiment rose 7.3% from the previous year in May 2013, according to the National Association of Home Builders.

Foreclosures and home repossessions are falling. During the year to April 2013, the total number of foreclosures completed in the U.S. dropped 16% to 52,000 units, while the foreclosure inventory fell by 24% year-on-year to about 1.1 million homes, according to CoreLogic, a data analytics firm. Lenders repossessed 34,997 houses in April 2013, the lowest level since July 2007, according to foreclosure listing firm, RealtyTrac Inc.

These encouraging figures are partly due to increased efforts by the government and state lawmakers to delay property seizures. In California, a new law prohibits lenders from pursuing a foreclosure while the borrower is still renegotiating his loan terms.

The U.S. economy grew by an annual rate of 2.4% in Q1 2013, slightly below expectations. Economic growth is projected to slow to 1.9% for the full year 2013, mainly due to the U.S. government’s increasingly contractionary fiscal policy, which includes tax hikes starting January 2013, and cutting the federal budget in March 2013. On the other hand, the Fed has kept the fed funds rate near zero since 2008 to buoy the economy.

Canada’s housing market slowing sharply

Canada’s housing market is now slowing sharply, mainly due to the government’s several rounds of housing market cooling measures and the slowing economy. During the year to end-Q1 2013, house prices in Canada’s eleven major cities rose by 1.58%, the lowest year-on-year increase seen since Q2 2011. House prices actually dropped 1.48% quarter-on-quarter during the latest quarter.

House prices in Canada surged by 49% from Q1 2000 to Q1 2009, mainly due to low interest rates and continuous economic growth. From Q2 2009 to Q3 2012, house prices increased by another 17%, despite efforts by the government to cool the housing market.

Despite many predictions of a disastrous crash, the government maintains its positive outlook on the Canadian housing market. “When I look at the housing market, I’m looking for the ‘doom and gloom’. I don’t see the ‘doom and gloom’. I see some moderation in demand. This is a good thing,” said Canadian Finance Minister Jim Flaherty.

Nationwide house prices are expected to drop slightly by 0.2% year-on-year during 2013, according to the Canadian Real Estate Association (CREA). In addition, sales activity is also projected to fall by 2.9% to 441,500 in 2013, from a year earlier.

Canada’s economic growth is projected to slow to 1.5% in 2013, from real GDP growth rates of 1.8% in 2012, 2.6% in 2011 and 3.2% in 2010, according to the Bank of Canada (BoC). This is amidst weak exports and high domestic household indebtedness. The BoC kept its key interest rate steady at 1% in May 2013.

More European countries are showing signs of improvement

Finally, there is good news even in Europe. Of the twenty-five European housing markets included in our global survey, fourteen performed better in Q1 2013 than the previous year while only eleven showed poorer performance.

Turkey had the fourth highest house price rises in our global survey. In Turkey, house prices rose by 8.13% during the year to Q1 2013, in sharp contrast with the 1.55% year-on-year decline seen in the same period last year. However, house prices dropped by 1.09% during the latest quarter.

The Turkish economy grew for the fourteenth consecutive quarter, with real GDP growth rate of 3% in Q1 2013 from a year earlier, according to the Turkish Statistical Institute (TurkStat).

Denmark’s house prices are also rising growing strongly. The price index of owner-occupied flats increased by 7.01% year-on-year in Q1 2013, after annual growth rates of 6.84% in Q4 2012 and 3.25% in Q3 and declines of 4.12% in Q2 and 5.52% in Q1. House prices rose by 3.25% during the latest quarter.

Other strong European housing markets included Norway, with house prices rising by 4.75% during the year to Q1 2013, Estonia (4.2%), Poland (3.24%), Sweden (3.11%), and Switzerland (2.42%). All saw house prices drop during the latest quarter (2.38% for Norway, 2.14% for Estonia, 4.81% for Poland, 0.69% for Sweden and 0.97% for Switzerland).

Some European housing markets also saw minimal house price increases. This category included Iceland, with house prices rising by 0.59% year-on-year in Q1 2013, Romania (0.52%), Riga, Latvia (0.3%), Finland (0.29%). All these, except Iceland, performed better during the year to Q1 2013, compared to a year earlier.

Despite this improvement, the thirteen weakest housing markets in our survey were all in Europe:

Greece remains the world's weakest housing market in Q1 2013. House prices dropped 11.53% during the year to Q1 2013, a slight improvement from the 12.01% year-on-year drop seen in Q1 2012. Greek house prices fell by just 0.22% quarter-on-quarter in Q1 2013, the slowest decline since Q1 2011.

The Greek economy is now suffering from a prolonged recession, amidst falling consumption and investment, exacerbating by the government’s austerity measures. The economy is expected to contract further by 4.2% in 2013, after shrinking 6.4% in 2012, 7.1% in 2011, 4.9% in 2010, 3.1% in 2009 and 0.2% in 2008. In Q1 2013, the economy shrank by 5.6% from a year earlier.

The Netherlands comes second on the list of the world's worst performers. House prices fell by about 11% during the year to Q1 2013, the nineteenth consecutive quarter of year-on-year house price falls. On a quarterly basis, house prices dropped by 2.92% in Q1. The economy is projected to shrink by 0.5% in 2013, from a contraction of 0.9% in 2012 and a growth of 1% in 2011.

Spain’s housing market downturn continues. Spanish house prices plunged 10.24% year-on-year in Q1 2013, the third worst performance in our global survey. However during the latest quarter, Spanish house prices actually increased by 0.28%. House prices in Spain plunged by 35% from Q3 2007 to 2012, due to the global financial meltdown.

The Spanish economy contracted for the seventh consecutive quarter, with real GDP falling by 0.5% in Q1 2013, according to the National Statistics Institute (INE). The economy is expected to contract by 1.6% in 2013.

Croatia had the fourth highest house price falls in our global survey. The average price of flats in Zagreb fell by 9.53% year-on-year in Q1 2013, the steepest decline since Q4 2009. During the latest quarter, house prices dropped 3.12%. Croatia is already on its fifth year of recession. The economy is expected to contract by another 0.2% in 2013, from annual declines of 2% in 2012, 0.05% in 2011, 2.3% in 2010, 6.9% in 2009.

Russia’s housing market performance remains miserable, despite robust economic growth. In Russia, house prices dropped by 8.09% during the year to Q1 2013, the steepest decline since Q1 2011. Over the same period, house prices also dropped by 9.49% in Moscow and 8.37% in St. Petersburg. The economy is projected to grow by 3.4% in 2013, almost unchanged from the previous year.

All five worst-performing housing markets, except Greece, saw bigger house price falls this year than during the previous year.

Some European countries despite experiencing house price-falls, saw their house price declines decelerate. These included Portugal, with house prices falling by -7.18% during the year to end-Q1 2013, Bulgaria (-4.52%) and Ireland (-3.51%).

European countries and capital cities with moderate house price falls during the year to Q1 2013 included Germany (-3.3%), Vilnius, Lithuania (-2.58%), UK (-2.52%), France (-2.37%), and Slovak Republic (-1.73%). All saw house prices drop during the latest quarter, except Vilnius, Lithuania, which saw slight increase of 0.08%.

Asian housing markets remain buoyant

Of the nine Asian housing markets included in our survey, eight saw house prices rise during the year to Q1 2013. In momentum terms, only two countries performed more poorly during the year to end-Q1 2013 than the previous year, while the other seven showed improved performance.

Hong Kong saw the world's second highest house price rises , with house prices surging 20.14% year-on-year in Q1 2013, far higher than the 2.11% annual increase seen during Q1 2012. House prices rose by 4.13% quarter-on-quarter during the latest quarter.

Housing completions in 2012 rebounded to 10 150 units, up by 7% from the previous year, according to the Rating and Valuation Department (RVD). Completions in 2013 and 2014 are expected to rise to 13 550 units and 15 820 units respectively.

Hong Kong’s economy expanded 2.8% in Q1 2013 from a year earlier. Economic growth is expected at about 3% in 2013, from 1.4% in 2012, 4.9% in 2011 and 6.8% in 2010.

House prices in Delhi, India, rose by 7.61% during the year to Q1 2013, from year-on-year increases of 6.05% in Q4 2012, 5.31% in Q3, 6.23% in Q2 and 24.41% in Q1 2012. Delhi house prices rose by 1.39% during the latest quarter.

In Beijing, China, the price index of second-hand residential buildings rose by 5.92% during the year to Q1 2013, in sharp contrast with year-on-year declines of 1.27% in Q4 2012, 3.81% in Q3, 4.97% in Q2 and 6.85% in Q1. House prices increased 4.52% during the latest quarter.

In Greater Taipei, Taiwan, house prices rose by 3.24% during the year to Q1 2013, in sharp contrast with the 0.38% year-on-year decline seen in the same period last year. House prices increased by 2.68% during the latest quarter.

Other Asian housing markets which saw modest year-on-year house prices increases in Q1 2013 include the Makati CBD, Philippines (2.34%), Tokyo, Japan (2.12%), Indonesia (2.04%), and Thailand (1.48%). Though Singapore had seen its house prices decline by 0.58% during the year to Q1 2013. This is an improvement from the 1.36% year-on-year decline registered in the same period last year.

NZ stays strong, Australia continues to recover

New Zealand's median house prices rose by 7.23% during the year to Q1 2013, from year-on-year rises of 8.55% in Q4 2012, 5.19% in Q3, 2.36% in Q2 and a decline of 0.2% in Q1 2012.

Demand is rising sharply. In the first quarter of 2013, the total number of dwellings sold in New Zealand soared by 12.1% year-on-year to 19,693 units, according to the Real Estate Institute of New Zealand (REINZ). Median-days-to-sale dropped to 31 days by end-Q1 2013, from 35 in the same period last year.

The rebuilding of earthquake-devastated Christchurch continues to bolster economic growth. New Zealand’s economy is expected to expand by 2.7% in 2013, from 2.5% in 2012, 1.4% in 2011 and 1.8% in 2010, according to the IMF.

In June 2013, the Reserve Bank of New Zealand (RBNZ) kept its official cash rate (OCR) at a record low of 2.5%, in place since March 2011.

Australia's housing market is now recovering, after eight consecutive quarters of house price falls. House prices in the country's eight major cities increased slightly by 0.11% during the year to Q1 2013, its second consecutive quarter of year-on-year growth.

The total number of dwelling units approved dropped by 2.5% to 21,046 units in Q1 2013 from a year earlier, according to the Australian Bureau of Statistics (ABS).

With the economy growing by just 0.6% during the latest quarter, the Reserve Bank of Australia (RBA) kept its cash rate to a record low of 2.75% in June 2013, in an effort to buoy the economy. The economy is expected to grow by 3% in 2013, from 3.6% in 2012, 2.4% in 2011 and 2.6% in 2010.

The UAE is red-hot! And Israel’s prices are surging again.

Dubai, UAE, had the world’s highest price rises in our survey, with house prices soaring by 28.02% during the year to Q1 2013. This is in sharp contrast with the 1.01% year-on-year decline seen in the same period last year.

After house prices fell by 53% from Q3 2008 to Q3 2011 due to the global financial and economic meltdown, Dubai started to recover in Q2 2012, supported by the emirate's robust economic growth. The strength of Dubai’s housing market has been 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.

The UAE’s economy is expected to expand by 3.6% in 2013, from a real GDP growth rate of 4.8% in 2012, according to the Institute of International Finance (IIF). UAE was recently awarded the coveted emerging market status and was already included in the MSCI Emerging Market Index.

Israel had the 9th highest price rises in our survey, ahead of China. In Israel, the average price of owner-occupied dwellings rose by 6.34% during the year to Q1 2013, after year-on-year increases of 4.12% in Q4 2012 and 3.14% in Q3 in 2012 and declines of 0.46% in Q2 and 3.33% in Q1 2012. House prices rose by 3.12% during the latest quarter, the highest growth since Q4 2010.

Demand is rising. In Q1 2013, the total number of dwellings sold climbed by 34.3% year-on-year to 4,817 units, according to the Central Bureau of Statistics (CBS). The number of dwellings for sale in the country dropped slightly by 1% in Q1 2013 from a year earlier.

In Q1 2013, the total number of dwellings begun fell by 3.4% year-on-year to 10,304 units while the number of dwellings completed rose by 5% year-on-year to 9,477 units, according to the CBS.

Israel's economy grew by 3.3% in 2012, after expanding by 4.6% in 2011, 5% in 2010 and 1.1% in 2009. In 2013, economic growth is expected at 3.6%, according to the IMF.

Brazil's housing market is still growing, but….

Brazil’s house price rises are slowing sharply, though Sao Paolo had the sixth highest house price rises in our survey.

In Sao Paulo, Brazil, house prices rose by 7.34% during the year to Q1 2013, far lower than the 18.45% year-on-year increase seen in Q1 2012. House prices in Sao Paulo were up 0.68% during the latest quarter.

The outlook is mixed. The central bank raised the Selic rate to 8% in May 2013, to rein in inflationary pressures, and economic growth is slowing. But Rio de Janeiro will host the FIFA World Cup final match in 2014, and the Olympics in 2016, which may augur well for house prices in that city.

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 2014.

The economy grew by an annualized 2.2% in Q1 2013, from 2.6% in the previous quarter. The Brazilian economy is expected to grow by 3.1% in 2013, up from real GDP growth rates of 0.9% in 2012 and 2.7% in 2011, based on projections by the Banco Central do Brasil.

South Africa's housing market continues to recover

South Africa’s housing market continues to recover, amidst slowing economy. In South Africa, the price index for medium-sized apartments rose by 3.09% during the year to end-Q1 2013, its second consecutive quarter of year-on-year increase.

House prices in South Africa declined by 15.5% from Q4 2007 to Q2 2009, mainly due to the adverse impact of the global crisis. After a short-lived recovery in 2010, house prices dropped again by 7% from Q1 2011 to Q2 2012.

Total mortgages rose by 1.6% year-on-year by end-Q1 2013, to ZAR1.09 trillion (US$109.3 billion), according to the South African Reserve Bank (SARB).

Construction activity is also up. The total number of residential building plans approved increased by 5% from a year earlier to 11,779 in Q1 2013, based on figures from Statistics South Africa (Stats SA). Likewise, the number of buildings completed also rose by 10.4% to 10,489 over the same period.

The South African economy grew by an annualized 0.9% in Q1 2013, down from 2.1% in Q4 2012 and the slowest pace since 2009, as manufacturing output slumped, according to Stats SA. The economy is expected to grow by 2.4% in 2013 and 3.5% in 2014, according to the SARB. The central bank has recently kept its benchmark interest rate at 5%, where it has been since July 2012.

Source: Various series, data descriptions and sources here

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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Matthew Montagu-Pollock
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