- The global real estate boom continues strong, especially in Europe. However the U.S. housing market is now cooling, after seven years of strong house price growth. The S&P/Case-Shiller seasonally-adjusted national home price index rose by just 1.44% during 2019 (inflation-adjusted), the weakest performance since 2011. FHFA figures showed a similar trend.
- Strong house price surges are taking place in European countries whose house prices previously lagged, such as Greece, Germany and Portugal.
- Real house prices (i.e., prices adjusted for inflation) rose in 31 out of the 51 world's housing markets which have so far published housing statistics.
- The more upbeat nominal figures, more familiar to the public, showed house price rises in 43 countries, and declines in only 8 countries.
- Twenty-nine of the 51 surveyed housing markets showed stronger momentum in 2019 compared to the previous year.
Yet global economic and political uncertainty does not favour a continuation of the property price boom. North America seems likely at the tail-end of its long economic expansion. Asia-Pacific is weakened by the COVID-19 outbreak, by the trade war, as well as by Hong Kong’s social unrest. And the Middle East suffers from political tensions and weaker oil prices.
Yet most of Europe continues to experience strong house price rises.
The strongest housing markets in our global house price survey during 2019 included: Athens, Greece (+11.29%), Germany (+11.15%), New Zealand (+10.28%), Jersey (+7.87%), and Portugal (+7.83%), using inflation-adjusted figures.
The biggest y-o-y house-price declines were in Qatar (-7.97%), Puerto Rico (-7.94%), Pakistan (-7.75%), Kiev, Ukraine (-5.54%), and Beijing, China (-4.69%), again using inflation-adjusted figures.
Momentum is still strong. 29 of the world’s housing markets for which figures are available showed stronger upward momentum during 2019, while 22 housing markets showed weaker momentum, according to Global Property Guide’s research. 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. 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|
The strongest performing markets:
Greece has emerged as the strongest housing market in Europe in our global house price survey, with house prices in Athens surging by 11.29% during 2019, sharply up from a growth of 3.53% a year ago, using inflation-adjusted figures. It was highest annual increase since 2001. On a quarterly basis, house prices in the capital city were almost unchanged in Q4 2019.
All figures that follow are inflation-adjusted.
Germany’s housing market continues to experience strong demand buoyed by extremely low interest rates. The average price of apartments rose strongly by 11.15% during 2019, sharply up from last year’s 6.78% growth. House prices increased 2.95% during the latest quarter.
New Zealand’s housing market is gaining momentum again, as the impact of the ban on non-resident foreign homebuyers wanes. Median house prices surged 10.28% during 2019, a sharp turnaround from the prior year’s 0.1% decline. On a quarterly basis, real house prices increased 4.86% in Q4 2019.
Jersey’s housing market is growing stronger, with house prices rising by 7.94% during 2019, a sharp turnaround from the previous year’s 0.4% decline and the highest growth in five years. Quarter-on-quarter, house prices increased 3.04% during the latest quarter.
Portugal’s housing market remains robust, fuelled by surging demand as well as improved economic conditions. Nationwide property prices rose by 7.83% during 2019, following y-o-y increases of 5.39% in 2018, 3.03% in 2017, 3.85% in 2016, and 4.06% in 2015. House prices increased 1.94% q-o-q in Q4 2019.
|Source: Various series, data descriptions and sources here|
THE WORLD'S REGIONS:
Europe’s great house price boom continues strong
European house price boom continues unabated. In fact, four of the five strongest housing markets in our global survey are in Europe. House prices have risen in no less than 20 of the 25 European housing markets for which figures were available during 2019.
After nine years of falling house prices, Greece’s housing market is now growing strongly again, thanks to improving economic conditions and market expansionary measures. In Athens, house prices surged 11.29% during 2019, sharply up from a growth of 3.53% a year ago. It was highest annual increase since 2001.
To revive the housing market, the Greek government has offered residence to non-EU investors purchasing or renting property worth over €250,000, similar to Hungary, Spain and Portugal. The plan is valid for five years and is open to renewal. Other measures introduced by newly elected Prime Minister Kyriakos Mitsotakis of the centre-right New Democracy party include the suspension of VAT payments on new building permits, and the reduction of the single property tax (ENFIA). The Greek economy grew by around 2% in 2019 – slightly up from last year’s 1.9% expansion and the highest growth since 2007. The IMF expects Greek GDP to grow by 2.2% this year but the European Commission is slightly more optimistic, projecting 2.3% growth.
Germany’s house price growth continues to accelerate, amidst strong demand buoyed by extremely low interest rates. The average price of apartments rose strongly by 11.15% during 2019, sharply up from last year’s 6.78% growth. House prices increased 2.95% during the latest quarter.
Germany has long been a picture of housing market stability and one of the few countries that avoided a house-price slump in the wake of the 2008-2009 global financial crisis.
Germany’s economy registered lacklustre growth in 2019, with real GDP growth of just 0.6%, sharply down from 1.5% in 2018 and the weakest expansion since 2013, according to the European Commission. Europe’s largest economy is expected to continue to struggle this year, with a GDP growth forecast of just 1.1%. Germany’s export-reliant economy was hit by the falling global demand for capital goods, with regional political uncertainty and structural changes in the automotive industry adding to the burden.
Portugal’s housing market continues to grow stronger, fuelled by surging demand as well as improved economic conditions. Nationwide property prices rose by 7.83% during 2019, following y-o-y increases of 5.39% in 2018, 3.03% in 2017, 3.85% in 2016, and 4.06% in 2015. House prices increased 1.94% q-o-q in Q4 2019.
All regions of Portugal experienced significant house price falls during the last decade. There was some recovery in 2009, but house prices started to fall again in the last quarter of 2010. Prices only began to recover in Q4 2014, after 13 consecutive quarters of y-o-y house price declines. The Portuguese economy grew by a modest 2% last year, slightly down from the prior year’s 2.4% growth, according to the Instituto Nacional de Estatistica. The economy is expected to expand by 1.7% both this year and in 2021, based on projections by the European Commission.
Other strong European housing markets include Jersey, with house prices rising by 7.87% during 2019, Estonia (7.57%), The Netherlands (6.55%), Lithuania (4.34%), North Macedonia (4.07%), and Romania (4.03%). All recorded positive quarterly growth during the latest quarter. All, except The Netherlands, had stronger performances in 2019 compared to the previous year.
Modest annual house price rises are recorded in the Slovak Republic (3.34%), Russia (3.01%), Sweden (3%), Vienna, Austria (2.94%), France (2.67%), Montenegro (2.29%), and Iceland (2.2%). All, except Slovak Republic and Sweden saw quarterly price growth during the latest quarter. Moreover, all, except Slovak Republic, Austria, and Iceland performed better in 2019 compared to a year earlier.
European housing markets that are almost steady included Malta, with house prices rising by a minimal 1.23% during 2019, Norway (0.95%), Denmark (0.87%), and Riga, Latvia (0.49%). Only Malta and Latvia recorded quarterly price growth during the latest quarter though both countries had weaker performance during 2019 as compared to a year earlier.
The UK’s housing market remains subdued. House prices in UK are still rising, though not in inflation-adjusted terms (though there seem to be signs of a "Boris Bounce" following the election of a new Prime Minister). The average UK house price rose slightly by 0.82% in 2019 but actually dropped 0.58% when adjusted for inflation. Last year was the country’s weakest performance since 2012. Quarter-on-quarter, real house prices were down slightly by 0.59% during the latest quarter. London remains the worst-performing region during 2019, with house prices falling by 1.85% (-3.21% inflation-adjusted), followed by Outer South East (-1.01%). The Bank of England projects economic growth of just 0.8% this year, following expansions of 1.4% in 2019 and 1.3% in 2018.
Europe’s weakest housing markets
Ukraine’s housing market remains depressed, although the economy is strengthening. Secondary market apartment prices in Kiev fell by 5.54% (inflation-adjusted) to an average price of US$ 1,011 per square metre (sq. m.) during 2019, following y-o-y declines of 6.09% in 2018, 7.97% in 2017, 3.35% in 2016, 2.77% in 2015, and 37.4% in 2014. House prices fell by 1.19% q-o-q in Q4 2019.
House prices have been falling in the past six years, particularly in 2014 (with prices plunging 37.38%) because of the devaluation of the hryvnia due to the Russian war. Currently, house prices are 76.2% (inflation-adjusted) below their Q3 2008 peak of US$3,627 per sq. m.
The Ministry for Development of Economy, Trade and Agriculture predicts higher economic growth this year at 3.7%, following 3.3% expansion in 2019, thanks to robust domestic demand, growth in the agricultural sector and better trade conditions.
Other weak European housing markets included Turkey, with house prices falling by 1.71% during 2019, Switzerland (-1.15%), and Ireland (-0.35%), though only in Ireland did the housing market perform more weakly during 2019 than the previous year. Also, only Ireland saw quarterly declines during the latest quarter.
The Asia-Pacific region is cooling
Only six of the fourteen Asia-Pacific housing markets included in our global survey showed stronger momentum in 2019 compared to a year earlier. House prices rose in seven countries, but the increase was only modest except in New Zealand.
New Zealand’s house prices are rising strongly again, as the impact of the ban on non-resident foreign homebuyers wanes. Median house prices surged 10.28% during 2019, a sharp turnaround from the previous year’s 0.1% decline. On a quarterly basis, real house prices increased 4.86% in Q4 2019.
Property sales in New Zealand rose by 12.3% to 6,285 units during the year to December 2019, according to the Real Estate Institute of New Zealand (REINZ). On the other hand, the number of properties available for sale fell by 24.5% to 18,230 units in December 2019 from a year earlier – the lowest level of inventory since records began.
For the last six years New Zealand's economy’s performance has been robust, with growth of 2.5% in 2019, 2.8% in 2018, 2.6% in 2017, 4.2% in 2016, 4% in 2015 and 3.1% in 2014. The economy is projected to grow further by 2.7% this year and by another 2.6% in 2021, based on IMF projections.
Surprisingly, Thailand’s housing market is strengthening, despite its slowing economy. Nationwide house prices rose by 4.88% in 2019, an improvement from the previous year’s 2.76% increase and the biggest growth since 2014. House prices increased 1.17% q-o-q during the latest quarter.
Thailand’s economic growth slipped to a five-year low last year, with real GDP growth easing to 2.4%, significantly lower than the 4.1% expansion in 2018, as a strong Thai baht and the global economic slowdown hurt exports, according to the National Economic and Social Development Board (NESDB). With the coronavirus outbreak threatening to add another drag to the economy, the NESDB has recently lowered its 2020 forecast to a range of 1.5% to 2.5%, from an earlier projection of 2.7% to 3.7%.
Hong Kong’s housing market remains resilient, despite market-cooling measures, the impact of the continuing violent protests, the US-China trade war, and the COVID-19 outbreak. Hong Kong’s residential property prices rose by 2.38% y-o-y in 2019, in contrast to an annual decline of 0.64% in 2018. Yet on a quarterly basis, house prices fell by 1.21% in Q4 2019.
After months of violent protests, HK’s economy contracted by 1.2% in 2019 - the first annual decline since 2009. Now the coronavirus outbreak threatens to make things worse. In an effort to contain the contagion, retail stores, theme parks and other hotspots have closed and the government decided to restrict cross-border mobility, cancelled school for weeks, ordered civil servants to work from home and urged private companies to do the same.
Singapore’s house price rises continue, albeit at a much slower pace, amidst a slowing economy. House prices rose by 1.86% during 2019, a sharp slowdown from a y-o-y growth of 7.32% a year earlier. Quarter-on-quarter, house prices rose by 0.22% in Q4 2019. The economy grew by a minuscule 0.7% during 2019, sharply down from an annual expansion of 3.1% in 2018 and the weakest performance since 2009.
There were modest house price rises in Tokyo, Japan (3.91%), Sri Lanka (2.46%), and Taiwan (2.06%). All saw house price rises during the latest quarter. Yet only Japan performed more strongly in 2019 than a year earlier.
Some Asian housing markets are struggling
Pakistan’s high inflation makes it appear that house prices are still rising. But this is an illusion. Nationwide house prices actually declined 7.75% during 2019 when adjusted for inflation, though in nominal terms they rose by 3.71%. Quarter-on-quarter, house prices fell slightly by 0.59% in Q4 2019 in inflation-adjusted terms. In January 2020, Pakistan’s inflation stood at 13.07%, the highest level in more than eight years.
Pakistan's economy grew by a modest 3.3% in 2019, a slowdown from the prior year’s 5.5% growth and the lowest expansion since 2010. Economic growth is projected to ease further to 2.4% this year, based on IMF estimates.
China’s housing market continues to slide, as COVID-19 fears cause demand to tumble and slow the economy. Even before the emergence of this new coronavirus, house prices had already fallen over the past two years, mainly due to regulatory and monetary policies restraining developers and speculative buyers. In Beijing, the price index of second-hand houses fell by 4.69% during 2019, following declines of 3.73% in 2018 and 3.32% in 2017. During the latest quarter, house prices in Beijing fell 1.67%.
The Chinese economy grew by 6.1% in 2019, the slowest pace since 1990. Economic growth is expected to slow further to 5.6% this year, according to the IMF.
Other weak Asia-Pacific housing markets included Macau, with house prices falling by 3.04% during 2019, Mongolia (-2.36%), Makati CBD, Philippines (-1.03%), Indonesia (-0.92%), and South Korea (-0.53%). All, except Mongolia, showed weaker performance in 2019 as compared to a year earlier. Only Macau and Indonesia saw quarterly declines in Q4 2019.
The Middle East’s housing markets improving
While the Middle East continues to struggle due to low oil prices and the ongoing political and diplomatic crisis, some of the region’s housing markets are now showing signs of improvement, except for Qatar.
Qatar’s housing market is now the weakest housing market in our global survey, despite the government’s continuous effort to mitigate the economic and financial fallout of the ongoing blockade. The nationwide real estate price index fell by 7.97% during 2019, worse than the previous year’s 2.38% y-o-y decline. Property prices fell by 0.54% during the latest quarter.
The Qatari economy is projected to expand by 2.8% this year, an improvement from 2% in 2019, 1.5% in 2018 and 1.6% in 2017, according to the IMF.
The UAE’s housing market is gradually recovering, amidst strengthening economic growth. In Dubai, residential property prices fell by 4.05% during 2019, an improvement from y-o-y declines of 8.22% in 2018 and 5.23% in 2017. During the latest quarter, house prices in Dubai fell 1.5% q-o-q. The UAE’s overall economy grew by 2.9% in 2019 from a year earlier, an improvement from the prior year’s 1.7% expansion. The IMF projects the economy to grow by 2.5% this year and by another 2.7% in 2021.
Israel’s housing market is gaining momentum, with the nationwide average price of owner-occupied dwellings rising by 2.12% during 2019, in contrast to a y-o-y decline of 2.98% in the previous year. Israeli house prices rose by 0.73% q-o-q in Q4 2019. The economy grew by 3.5% last year and is expected to expand by 2.9% this year.
Although Egypt’s housing market remains fragile, it is now showing remarkable improvement. The nationwide real estate index fell by just 2.28% during 2019, a sharp deceleration from y-o-y declines of 19.24% in 2018 and 11.49% in 2017. However, real house prices fell 10.12% q-o-q during the latest quarter.
President Abdel Fattah el-Sisi recently removed the last restrictions on foreign ownership of land and property in Egypt, in an effort to buoy the housing market. He also allowed the government, the biggest landowner in Egypt, to use its land for public-private partnership schemes. However house prices are being undermined by the vast amount of new construction, for instance in the new capital. After expanding by an average of 4.6% annually in the past four years, Egypt’s economy grew by 5.6% in 2019, as various economic reforms are now starting to boost business investment and private consumption. The government’s IMF-spurred policy reforms have contributed to an upgrade of its sovereign credit rating by Fitch Ratings in March 2019 and followed by Moody’s in April 2019.
The Americas: US and Canada are slowing sharply
U.S. house prices continue to rise, albeit at a slower pace. Canada's almost decade–long housing boom is finally over. In Latin America, Chile and Mexico continue to grow stronger while Brazil and Peru, on the other hand, remain weak.
After six years of strong house price growth, the U.S. housing market is cooling. There was a 1.44% rise in the S&P/Case-Shiller seasonally-adjusted national home price index during 2019 (inflation-adjusted), a slowdown from the previous year’s 2.59% growth and the weakest performance since 2011. Real house prices increased by a minuscule 0.13% during the latest quarter, according to S&P/Case-Shiller.
The Federal Housing Finance Agency’s seasonally-adjusted purchase-only U.S. house price index shows a better picture, rising by 3% y-o-y in 2019 (inflation-adjusted), a slight slowdown from the prior year’s 3.66% growth. The FHFA index rose by 1.05% q-o-q during the latest quarter.
However housing demand and supply continue to rise strongly. Sales of new single-family houses were up 18.6% y-o-y to a seasonally-adjusted annual rate of 764,000 units in January 2020. Likewise, existing home sales rose by 9.6% y-o-y to a seasonally-adjusted annual rate of 5.46 million units in January 2020.
New housing starts rose by 21.4% y-o-y to a seasonally-adjusted annual rate of 1,567,000 units in January 2020, while completions were up 1.5% to 1,280,000 units. U.S. homebuilder sentiment remains near record-highs at 74 in February 2020, a point lower than the previous month, against a backdrop of strong demand and falling mortgage interest rates, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). A reading of 50 is the midpoint between positive and negative sentiment.
The U.S. economy grew by a modest 2.3% in 2019 from a year earlier, following annual expansions of 2.9% in 2018 and 2.4% in 2017. Economic growth is expected to slow further to 2% this year and 1.8% in 2021, mainly due to the ongoing trade war, according to the Fed.
House prices in Canada's eleven major cities fell by 0.29% during 2019, in contrast to y-o-y rises of 0.51% in 2018, 6.92% in 2017, 10.59% in 2016, and 4.76% in 2015, amidst the introduction of several rounds of market-cooling measures in recent years. Quarter-on-quarter, house prices rose slightly by 0.17% in Q4 2019.
Despite this, demand is rising again. Sales were up strongly by 22.7% in December 2019 from a year earlier, a sharp turnaround from a 19% decline in sales in December 2018, according to the Canadian Real Estate Association (CREA). Sales transactions surpassed the previous year’s levels across most of Canada, including all of the largest urban markets. For the whole year of 2019, total sales were estimated at 486,800 units, up 6.2% from a year earlier. In contrast, housing starts fell by 2% in 2019 from a year earlier while completions dropped 6.5% over the same period.
The Canadian economy was estimated to have expanded by just around 1.7% in 2019, a deceleration from annual growth of 1.9% in 2018 and 3% in 2017, mainly due to a beleaguered oil and gas industry, coupled with the US-China trade tensions and other global risks. Bank of Canada (BoC) expects the economy to grow by 1.6% this year. In January 2020, the BoC kept its key rate unchanged at 1.75%, after raising it five times since July 2017.
Latin America: Mexico and Chile continue to strengthen; Brazil and Peru still depressed
Chile’s housing market is strengthening, as the impact of the property sales tax introduced three years ago has waned. The average price of new apartments in Greater Santiago rose strongly by 6.49% during 2019, after y-o-y rises of 6.94% in 2018 and 6.69% in 2017, and an annual decline of 1.82% in 2016. On a quarterly basis, house prices increased 1.86% in Q4 2019.
Chile’s economy grew by 1.2% in 2019 from a year earlier, supported by an improvement in the mining sector, but this remains sharply down from the previous year’s 4% growth. The protests that began in early-October 2019 have since dampened prospects from the remainder of the year. Recently, the Central Bank of Chile slashed its 2020 growth forecast to a range of 0.5% to 1.5%, from an earlier projection of 2.75% to 3.75%.
Mexico’s housing market remains strong, despite struggling economy. The nationwide house price index rose by 4.58% during 2019, the biggest y-o-y increase since 2016. On a quarterly basis, house prices fell slightly by 0.27% during the latest quarter. The Mexican economy shrank by 0.1% in 2019 from a year earlier, in contrast to a 2.1% growth in 2018 and the weakest performance in a decade.
Brazil’s housing market continues to struggle, despite improving economic conditions. In Sao Paulo, house prices fell by 1.96% during 2019, from annual declines of 1.89% in 2018, 1.5% in 2017, 5.53% in 2016, and 7.38% in 2015. On a quarterly basis, house prices in Sao Paulo dropped 1.23% in Q4 2019. The economy grew by a minuscule 1.12% in 2019 from a year earlier, but is expected to improve to 2.4% growth this year.
Peru’s housing market remains weak, with house prices falling by 2.52% during 2019, following annual declines of 0.64% in 2018, 1.14% in 2017, 1.03% in 2016 and 7.88% in 2015. During the latest quarter, house prices dropped 2.79% q-o-q.
South Africa's housing market has hardly moved
South Africa’s housing market remains sluggish, amidst depressed macroeconomic environment. The price index for medium-sized apartments fell by 0.5% during 2019, after y-o-y declines of 0.24% in 2018, 0.61% in 2017, and 2.33% in 2016, and annual rises of 1.01% in 2015, 0.92% in 2014, and 2.33% in 2013. On a quarterly basis, house prices were almost unchanged in Q4 2019.
Recently, South Africa's government cut its economic growth forecast for 2020 to a minuscule 0.9%, from its initial projection of a 1.7% expansion, amidst revenue shortfall, huge debt and persistent electricity shortages. The economy grew by a meager 0.4% last year, following expansions of 0.8% in 2018 and 1.4% in 2017.
Puerto Rico’s housing market still suffering
After a short-lived recovery in 2017, Puerto Rico’s house prices are falling again. The seasonally-adjusted purchase-only house price index fell by 7.94% during 2019, following a y-o-y decline of 8.39% in the previous year, using inflation-adjusted figures. Quarter-on-quarter, house prices fell by a huge 11.13% in Q4 2019.
The housing market has suffered tremendously for most of the decade. The island has experienced a prolonged economic crisis, massive debt, high unemployment and continuing population loss. With US$70 billion in debt and US$50 billion in pension liabilities, Puerto Rico's bankruptcy filing in May 2017, was the biggest in the history of the United States. The economy contracted by about 1.1% in 2019, following declines of 4.9% in 2018, 2.7% in 2017, 1.3% in 2016, 1% in 2015, and 1.2% in 2014, according to the IMF.