The world's housing markets had a weak third quarter of 2011, according to the latest survey of world-wide house price indices prepared by the Global Property Guide. During the year to end Q3 2011, house prices fell in 25 countries, of the 44 countries for which quarterly house price statistics are available, and rose in only 19 countries.
Moreover, 26 housing markets performed more poorly during the year to the third quarter than last year, while only 18 countries performed better.
|Source: Various series, data descriptions and sources here|
The Global Property Guide's statistical presentation uses price-changes after inflation, giving a more realistic picture than the more upbeat nominal figures usually preferred by real estate agents.
What is most remarkable this quarter is the wide variety of outcomes:
The BRICs' two spectacular outperformers
India and Brazil' housing markets have continued their spectacular outperformance, with Delhi house prices up 22.68% during the year to Q3 2011, according to National Housing Bank (NHB) figures. There were strong house price increases in almost all India's major cities, reflecting the country's current high rate of consumer price inflation, despite a drop in demand resulting from the repo rate hike in October currently at 8.50%), the 13th since March 2010, making home loans costlier.
The NHB Residex only started publishing quarterly figures in 2010; from 2008 to 2009, the Residex was updated semi-annually.
|Source: Various series, data descriptions and sources here|
Brazil's Sao Paolo had the second highest house price rise in the world during the third quarter, with house prices up 5.88% during the quarter, according to the FIPE- Zap price index. Sao Paolo had an astonishing year, with house prices up 20.26% during the year to Q3 2011. The country is experiencing an unprecedented boom, not least because it is the host country for the World Cup in 2014 and the Olympics in Rio de Janeiro in 2016.
Europe's housing markets mixed
The world's second strongest quarter-on-quarter house price rise occurred in an unexpected city - Vienna, where house prices surged by 5.44% during the quarter (and +4.25% on the year), continuing 6 years of nearly unbroken price rises for Austria's capital.
The Baltics have also performed strongly. Latvia is the third best performer among all reporting countries in our survey over the twelve months to Q3 2011. In Riga, standard type apartments rose 13.31% year-on-year, a quick comeback after a fall of 5.40% in the second quarter.
Following Latvia was Estonia, whose housing market is rallying after three years of terrific losses that began during the onset of the global financial crisis. During the year to end Q3 2011, house prices in Tallinn were up 12.30% with a quarterly rise of 2.71%.
And though prices in Lithuania's five largest cities were down on the year to Q3 (-4.44%), their momentum is up compared to last year. During the latest quarter Lithuania's house prices rose very slightly (+0.22%). Generally Lithuania follows the pattern of Latvia and Estonia, with a lag, so the latest quarter's house price rises may be a precursor to a house price recovery in the new year.
The Irish housing market remains the world's weakest performer. House prices were down 15.61% year-on-year, the steepest decline since 2008. Quarter-on-quarter, Ireland's house prices slid 4.25%.
Several other European housing markets experienced accelerated downturns during the year ending in the third quarter of 2011, including Netherlands (-5.20%), Portugal (-6.77%), Slovak Republic (-7.94%), Warsaw, Poland (-7.95%), Spain (-8.41%) and Bulgaria (-9.65%).
Conversely, European countries which saw slower house price falls this year than the previous year include Turkey (-0.50%), Russia (-3.47%), Croatia (-4.59%), Hungary (-4.67%), Athens, Greece (-6.57%) and Kiev, Ukraine (-7.02%).
Asian housing markets now cooling
In Asia, several countries had house price increases during the year to end Q3 2011, albeit less strong than last year, following the government measures to curb the heat in their respective housing markets.
- In Hong Kong, house prices were up 12.07% year-on-year, after a rise of 19.30% the previous year.
- In Malaysia, house prices rose by 3.15% year-on-year, after a rise of 5.76% during the same period last year.
- In Singapore, house prices rose by 2.73% year-on-year, a big drop from last year's 18.96%.
- In Taiwan, house prices were up a mere 0.46% year-on-year, after a rise of 6.97% during the same period the previous year. During the latest quarter, house prices were down 7.02%.
In Japan (Tokyo) and China (Shanghai), housing markets have been deteriorating since Q1 2011, and during the year to end Q3 2011, house prices dropped by 1.99% and 4.16%, respectively. House price declines are being reported across China, indicating the success of government measures during the past year. The country's skyrocketing housing prices have been blamed for social tensions and other economic problems.
Patchy progress for North America
The Canadian housing market has been a notable performer in the year to Q3 2011, with house prices in the six cities rising by 3.25% year-on-year, according to Teranet - National Bank Composite House Price Index. Record-low interest rates and a fairly stable Canadian economy have bolstered consumer confidence in the housing market. During the third quarter, house prices were up 3.46%.
In the United States, the housing market drifted lower as house prices plummeted by 7.22% (seasonally-adjusted) year-on-year to Q3 2011, according to the Federal Housing Finance Agency (FHFA). However, the number of homeowners who owe more than their homes' worth decreased modestly in the third quarter, though levels remained high.
The seasonally-adjusted Case-Shiller index was a bit more negative, as it fell by 7.42% from a year earlier, and by 1.61% in the latest quarter.
"I don't know what will happen, but I don't see any reason to predict the recovery now," said index co-founder Robert Shiller to Reuters on November 29.
Israeli house price boom now over
House prices in Israel fell 0.58% in the year to Q3 2011, the first drop since 2009. During the latest quarter, house prices were down 3.65%.
The moderation in home prices comes against the background of the continued increase in the number of building starts, the lagged effect of the increase in the interest rate, measures introduced by the Bank of Israel affecting mortgages, and steps taken by the Ministry of Finance in real estate taxation. The effect of these moves is expected to continue and be evident going forward.
Pacific housing markets heading down
In New Zealand, median house prices were down 4.30% from a year earlier, with a quarterly house price fall of 2.26%. However, there is optimism in the housing market buoyed by low interest rates and recovery following earthquakes in Christchurch.
High interest rates and global economic uncertainty have continued to impact the Australian housing market, and it slumped 5.55% in the year to Q3 2011, the third quarter in which annual house price falls were reported this year.
Accordingly, the Reserve Bank of Australia (RBA) lowered the benchmark interest rate in November, the first time since April 2009, moving to boost the nation's economy amid uncertainty stemming from Europe's debt crisis. The benchmark rate is currently at 4.50%.