Investment Analysis

Q1 2019: Continued strong house price rises in Europe and Asia-Pacific, but globally housing markets are slowing

During the year to Q1 2019:

  • House prices rose in 29 out of the 49 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 41 countries, declines in 8 countries.
  • However, 30 of the surveyed housing markets showed weaker momentum in Q1 2019 compared to the previous year, suggesting that global house price growth is now decelerating.

Underlying economic trends do not appear to favour a continuation of the property price boom.  North America seems likely at the tail-end of its long economic expansion. Asia appears weakened by the trade war. And the Middle East suffers from political tensions and weaker oil prices.

Yet most of Europe and Asia-Pacific continue to experience strong house price rises. There have also been notable increases in the Philippines, Germany, New Zealand and Qatar. But Hong Kong, Ireland, Turkey, Montenegro and most of the Middle East have experienced either house price falls - or a sharp deceleration of house price rises.

The strongest housing markets in our global house price survey during the year to Q1 2019 included: Makati CBD, Philippines (+15.15%), Malta (+9.36%), Sri Lanka (+9.27%), Germany (+9.32%), and New Zealand (+8.76%), using inflation-adjusted figures.

The biggest y-o-y house-price declines were in Egypt (-22.61%), Turkey (-13.58%), Montenegro (-12.61%), Kiev, Ukraine (-5.53%), and Dubai, UAE (-5%), again using inflation-adjusted figures.

Momentum is much weaker. Only 19 of the world’s housing markets for which figures are available showed stronger upward momentum during the year to Q1 2019, while 30 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). Weaker momentum indicates, at least, that the housing boom isn't strengthening. 

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:

The Philippines is now the strongest housing market in our global survey with the average price of 3-bedroom condominium units in Makati CBD surging by 15.15% during the year to Q1 2019, a sharp improvement from the previous year’s 5.87% price rises, using inflation-adjusted figures. Housing prices increased strongly by 5.82% during the latest quarter. After expanding by 6.2% last year, the Philippine economy is expected to grow at a slightly faster pace of 6.4% this year.

All figures that follow are inflation-adjusted.

Sri Lanka’s housing market is experiencing an extraordinary boom, buoyed by its strong tourism sector. Nationwide house prices rose by 9.27% during the year to Q1 2019, after y-o-y rises of 13.83% in Q4 2018, 5.28% in Q3, 14.23% in Q2 and 15.38% in Q1. Quarter-on-quarter, house prices increased 5.63% during the latest quarter. The economy is projected to grow by 3.6% this year, after expansions of 3.2% in 2018 and 3.3% in 2017.

Malta’s housing market continues to perform very well, with residential property prices rising by 9.36% during the year to Q1 2019, after y-o-y rises of 10.48% in Q4 2018, 12.87% in Q3, 14.52% in Q2 and 12.07% in Q1. During the latest quarter, property prices rose by 4.37% q-o-q. Malta's economy is projected to grow by 5.5% this year – the fastest pace in the EU and about three times the EU's average economic growth.

New Zealand’s housing market is strengthening again, with median house prices rising by 8.76% during the year to Q1 2019, in contrast to a y-o-y decline of 3.37% in the prior year. On a quarterly basis, house prices increased 4.36% in Q1 2019. However, economic growth is projected to slow to 2.5% this year, after annual growth rates of 3% in both 2017 and 2018, 4.1% in 2016, 4.2% in 2015 and 3.2% in 2014.

Germany’s housing market continues to grow stronger, thanks to extremely low interest rates. The average price of apartments rose by 9.23% during the year to Q1 2019, an improvement after last year’s 4.19% growth. On a quarterly basis, house prices increased 3% in Q1 2019. However Germany’s economy registered lackluster performance in 2018, with real GDP growth of just 1.4%, the weakest expansion in five years, and its economy is expected to slow further this year, with a projected growth of just 0.5%.

Source: Various series, data descriptions and sources here

THE WORLD'S REGIONS:

Europe remains vibrant

European house price rises continue unabated. In fact, half of the 10 strongest housing markets in our global survey are in Europe. House prices have risen in no less than 14 of the 25 European housing markets for which figures were available during the year to Q1 2019.

Malta’s housing market is growing at breakneck speed, buoyed by its very strong economy, coupled with the introduction of the Individual Investor Programme (IIP) and stamp duty exemption for first-time buyers. Residential property prices rose by 9.36% during the year to Q1 2019, after y-o-y rises of 10.48% in Q4 2018, 12.87% in Q3, 14.52% in Q2 and 12.07% in Q1. During the latest quarter, property prices rose by 4.37% q-o-q. Malta's economy grew by a robust 6.6% in 2018, and is projected to grow by 5.5% this year – the fastest pace in the EU and about three times the union’s average growth rate.

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 average price of apartments rose by 9.23% during the year to Q1 2019, up from last year’s 4.19% growth. On a quarterly basis, house prices increased 3% in Q1 2019.

However Germany's economic growth was disappointing in 2018, with real GDP growth of just 1.4%, the country's weakest expansion in five years. The government recently cut its growth projection this year to 0.5%, half the pace previously forecast.

Portugal’s housing market continues to grow stronger, fuelled by surging demand as well as improved economic conditions. Property prices in Portugal rose by 5.96% during the year to Q1 2019, up from y-o-y increases of 5.39% in Q4 2018, 4.7% in Q3, 4.53% in Q2 and 4.7% in Q1. House prices increased 1.88% q-o-q in Q1 2019.

All regions of Portugal have experienced significant house price falls during the last decade. Prices only began to recover in Q4 2014, after 13 consecutive quarters of y-o-y house price declines. The Portuguese economy is expected to grow by 1.7% this year, after growth of 2.1% in 2018, 2.8% in 2017, 1.6% in 2016, 1.8% in 2015, and 0.9% in 2014.

Other strong European housing markets include the Netherlands, with house prices rising by 4.64% during the year to Q1 2019, Slovak Republic (4.53%), Vienna, Austria (3.85%), Ireland (2.78%), Spain (2.37%) and Lithuania (2.28%). All, except Netherlands and Ireland, recorded positive quarterly growth during the latest quarter and had stronger performances in Q1 2019 than the previous year.

Minimal annual house price rises occurred in Russia (1.95%), France (1.78%), Iceland (1.41%), Tallinn, Estonia (0.98%), and Norway (0.04%), but all saw quarterly growth during the latest quarter.

Europe's weakest housing markets

Turkey's housing market continues to weaken, amidst a weak currency (the lira), record high inflation, and political conflict with the US. Nationwide residential property prices fell by 13.58% during the year to Q1 2019, far worse than the previous year's 2.05% decline. On a quarterly basis, house prices fell by 1.06% during the latest quarter.

Turkey's inflation stood at 19.5% in April 2019. The Turkish lira plunged to record lows, having shed almost 45% of its value against the US dollar during the past three years. The economy is expected to contract by 2.5% this year, according to the IMF.

Montenegro’s house prices are now falling sharply, mainly because Russian buyers have stayed away. The price of new dwellings fell by 12.61% during the year to Q1 2019, worse than the previous year’s 3.62% drop. House prices fell 7.39% during the latest quarter. The economy is projected to expand by 2.8% this year, the lowest growth in five years.

Ukraine's housing market remains depressed, despite improved economic conditions. Secondary market apartment prices in Kiev fell by 5.53% (inflation-adjusted) to an average price of US$ 1,038 per square metre (sq. m.) during the year to Q1 2019, the 22nd consecutive quarter of y-o-y price declines. House prices fell by 1.38% q-o-q in Q1 2019.  Currently, house prices in Ukraine are 75% (inflation-adjusted) below their Q3 2008 peak.

Ukraine's economy grew by 2.2% in Q1 2019 from a year earlier, following y-o-y expansions of 3.4% in Q4 2018, 2.8% in Q3, 3.8% in Q2 and 3.1% in Q1. Economic growth is projected at a modest 2.5% this year, based on estimates from the National Bank of Ukraine.

Other weak European housing markets included Romania, with house prices falling by 2.19% during the year to Q1 2019, Sweden (-2.09%), Switzerland (-2.05%), Jersey (-1.77%), UK (-1.36%), Macedonia (-0.65%), Finland (-0.49%), and Riga, Latvia (-0.46%). Only Macedonia, Sweden and Jersey saw quarterly growth during the latest quarter. All, except Switzerland, showed weaker performance in Q1 2019 as compared to the previous year.

The Asia-Pacific region is sizzling hot

Three of the five strongest housing markets in our global survey are in Asia-Pacific – Philippines, Sri Lanka and New Zealand. In fact, house prices rose in 10 of the 13 housing markets for which figures were available during the year to Q1 2019.

The Philippines is now in its eight-year of house price boom, amidst strong economic growth. The average price of 3-bedroom condominium units in Makati CBD surged 15.15% during the year to Q1 2019, a sharp improvement from the previous year’s 5.87% growth. Housing prices rose by 5.82% during the latest quarter. Makati CBD property prices have risen by almost 132% from 2010 to 2018.

The Philippine economy expanded by 5.6% in Q1 2019, slower than the 6.5% growth recorded in Q1 2018, as some government infrastructure projects were paused due to the delayed national budget approval. The economy is projected to grow by 6.4% this year, up from 2018’s 6.2% expansion but lower than the average annual growth rate of 6.6% from 2012 to 2017.

Sri Lanka’s housing market is experiencing an extraordinary boom, amidst a surging tourism sector, coupled with weak residential construction activity. Nationwide house prices rose by 9.27% during the year to Q1 2019, after y-o-y rises of 13.83% in Q4 2018, 5.28% in Q3, 14.23% in Q2 and 15.38% in Q1. Quarter-on-quarter, house prices increased 5.63 during the latest quarter. Sri Lanka’s booming tourism sector is fuelling property demand. In 2018, Sri Lanka saw a record 2.3 million tourist arrivals, up 10.3% from a year earlier. The economy is projected to grow by 3.6% this year, from expansions of 3.2% in 2018 and 3.3% in 2017.

New Zealand’s housing market is strengthening again, despite the new regulation that bans non-resident foreigners from buying existing homes in the country. Median house prices rose by 8.76% during the year to Q1 2019, in contrast to a y-o-y decline of 3.37% in the prior year. New Zealand's economic growth was 3% in both 2017 and 2018, 4.1% in 2016, 4.2% in 2015 and 3.2% in 2014. The economy is projected to grow by 2.5% this year and by another 2.9% in 2020.

Modest to minimal annual house price rises were registered in Tokyo, Japan (3.04%), Singapore (2.61%), Thailand (2.3%), South Korea (2.02%), Taiwan (1.54%), Macau (1.07%) and Indonesia (0.16%). All, except Singapore, South Korea, and Macau, saw house price rises during the latest quarter.

Some Asian housing markets remain weak

Pakistan's high inflation makes it appear that house prices are rising strongly. But it's an illusion. Nationwide house prices, in nominal terms, rose by 4.8% during the year to Q1 2019, but actually declined 4.22% when adjusted for inflation. Quarter-on-quarter, real prices dropped 2.42% in Q1 2019. In March 2019, Pakistan's inflation stood at 9.4%, sharply up from just 3.2% in the same period last year and the highest level recorded since November 2013. Despite the country's troubles, the economy grew by a robust 5.2% in 2018, after expanding by 5.4% in 2017, 4.6% in 2016, and 4.1% in both 2014 and 2015. Economic growth is projected to slow to around 3.9% this year.

China's housing market is cooling rapidly, with new regulatory and monetary policies impacting developers and speculative buyers. In Shanghai, the price index of second-hand houses fell by 3.95% during the year to Q1 2019, its sixth consecutive quarter of y-o-y house price falls. During the latest quarter, house prices in Shanghai fell by 0.83%.

The Chinese economy grew 6.6% in 2018, the slowest pace in 28 years, amidst its ongoing trade war with the US. In Q1 2019, the economy expanded by 6.4% from a year earlier, at par with the previous quarter’s performance. Economic growth is expected to slow further to 6.2% this year, according to the IMF.

Hong Kong's housing market boom appears to be over, with residential property prices falling by 0.04% during the year to Q1 2019, in stark contrast to a y-o-y rise of 12.28% in Q1 2018. The slowdown is mainly due to slowing demand from Chinese homebuyers, deteriorating affordability, rising mortgage rates, as well as the adverse impact of the ongoing US-China trade war. 

In recent years, Hong Kong’s government has leaned against property price rises. The government raised stamp duties for all non-first time homebuyers starting November 2016 and cut allowable loans on residential and commercial properties in May 2017. Chief Executive Carrie Lam unveiled another series of cooling measures in June 2018, including a tax on vacant flats.

Despite this, sales of new homes surged by 94.3% y-o-y (though existing home sales fell 30.4% y-o-y in Q1 2019), and on a quarterly basis, house prices increased 4.55% in Q1 2019.

Hong Kong’s economy grew by just 0.5% in Q1 2019 from a year earlier – the weakest growth since the aftermath of the global crisis a decade ago. Secretary of Finance Paul Chan estimates that HK’s economy will grow by a modest 2% to 3% this year.

The Middle East's housing markets continue to struggle

The Middle East is now in the doldrums, with two of the five weakest housing markets in our global house price survey in the region: Egypt and UAE. This is not surprising given the region's ailing economy due to low oil prices and the ongoing political and diplomatic crisis.

Egypt remains the weakest housing market in our global survey, with the nationwide real estate index plunging by 22.61% in Q1 2019 from a year earlier, in sharp contrast to a y-o-y rise of 4.33% in Q1 2018. Nominal house prices also fell by 11.66% y-o-y in Q1 2019. However real house prices increased 4.36% 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.

After expanding by an average of 4.6% annually in the past four years, Egypt’s economy is expected to remain strong, with projected growth of 5.5% this year and 5.9% in 2020, as various economic reforms are expected to support business investment and private consumption in the coming years. The government’s IMF-spurred policy reforms have contributed to an upgrade of its sovereign credit rating by Fitch Ratings in March 2019.

Other Middle Eastern housing markets are also depressed. In Dubai, residential property prices fell by 5% during the year to Q1 2019, its 17th straight quarter of y-o-y price falls, amidst weak economic growth, low investor sentiment, and an oversupply of housing. During the latest quarter, house prices in Dubai increased slightly by 0.38% q-o-q.

Likewise, Israel's decade-long house price boom is now over, with government cooling measures intensifying. The nationwide average price of owner-occupied dwellings dropped 0.95% during the year to Q1 2019, in contrast to the previous year's 0.7% growth. It was the fourth consecutive quarter of y-o-y price declines. Israeli house prices rose by a meager 0.61% q-o-q in Q1 2019.

Surprisingly, Qatar's housing market is now showing some signs of improvement, as the government continues to effectively mitigate the economic and financial fallout of the ongoing blockade. The nationwide real estate price index rose by 2.22% during the year to Q1 2019, in contrast to last year’s 10.61% decline. Property prices rose by 3.21% q-o-q during the latest quarter.

The Americas are mixed

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 is strengthening while Mexico continues to improve. Brazil, on the other hand, remains depressed.

After six years of strong house price growth, the U.S. housing market is cooling. The S&P/Case-Shiller seasonally-adjusted national home price index rose by just 1.83% during the year to Q1 2019 (inflation-adjusted) – the lowest growth since Q3 2012. House prices fell by 0.57% during the latest quarter.

The Federal Housing Finance Agency's seasonally-adjusted purchase-only U.S. house price index increased 3.35% y-o-y in Q1 2019 (inflation-adjusted), the lowest growth since Q3 2014. The FHFA index rose by a meagre 0.81% q-o-q during the latest quarter.

Demand and construction activity are mixed. Sales of new single-family houses were up 7% y-o-y to a seasonally-adjusted annual rate of 673,000 units in April 2019. In contrast, existing home sales fell by 4.4% y-o-y to 5.19 million units in April 2019. New housing starts fell by 2.5% y-o-y to a seasonally-adjusted annual rate of 1,235,000 units in April 2019, while completions were up 5.5% to 1,312,000 units.

The U.S. economy grew by 3% in 2018 from a year earlier, the fastest pace since 2005, according to the U.S. Federal Reserve. However, the world’s biggest economy is expected to slow in coming years, with projected GDP growth rates of 2.3% this year and 1.9% in 2020, mainly due to the ongoing trade war.

House prices in Canada's eleven major cities fell slightly by 0.35% during the year to Q1 2019, in contrast to last year’s 4.2% growth - the market’s worst performance in almost a decade. Quarter-on-quarter, house prices declined 2.26% in Q1 2019.

The Canadian Real Estate Association (CREA) expects home sales to fall by 1.6% to 450,400 units this year, marking the weakest annual sales since 2010, amidst the introduction of another set of market-cooling measures, against a backdrop of mortgage interest rates having risen five times since July 2017.

The Canadian economy grew by 1.8% in 2018, a slowdown from the preceding year’s 3% growth, mainly due to its ailing oil and gas industry. BoC expects economic growth to slow further to 1.2% this year, after the economy nearly ground to a halt in Q1 2019.

Despite all this, demand is rising again. Sales were up 4.2% in April 2019 from a year earlier, the first y-o-y growth since December 2017, mainly driven by gains in the Greater Toronto Area and Montreal, according to the Canadian Real Estate Association (CREA), and in contrast to a 11.2% decline in sales in 2018.

Latin America: Mexico and Chile continue to grow stronger; Brazil remains depressed

Chile's housing market continues to grow stronger, despite the introduction of a property sales tax in 2016. The average price of new apartments in Greater Santiago rose by 5.04% during the year to Q1 2019, its eight consecutive quarter of annual price rises. Quarter-on-quarter, house prices rose by 2.54% in Q1 2019.

Mexico's housing market continues to rise, with the nationwide house price index rising by 4.73% during the year to Q1 2019, up from growth of 2.98% in the same period last year. On a quarterly basis, house prices rose 1.27% during the latest quarter.

Brazil's housing market continues to struggle, despite improving economic conditions. In Sao Paulo, house prices fell by 2.41% y-o-y in Q1 2019, from annual declines of 1.89% in Q4 2018, 2.52% in Q3, 2.38% in Q2 and 1.11% in Q1. On a quarterly basis, house prices in Sao Paulo fell by 0.72% in Q1 2019.

South Africa's housing market remains sluggish

South Africa's housing market remains sluggish, amidst economic uncertainty. The price index for medium-sized apartments fell by 0.51% during the year to Q1 2019, after y-o-y declines of 0.17% in Q4 2018, 0.79% in Q3, 0.24% in Q2 and 0.66% in Q1. On a quarterly basis, house prices dropped 0.32% in Q1 2019.

The South African economy grew by a minuscule 0.8% in 2018, following a 1.3% expansion in 2017. Recently, the South African Reserve Bank slashed its 2019 growth projection for South Africa’s economy to 1.3%, from its earlier estimate of 1.7%, amidst constraints on domestic demand and limited government spending.

Subscription required to access this page

Access to premium content and weekly market updates.

Subscribe to Global Property Guide

Get the data behind 60+ countries for $9.99 per month.
Latest Market Reports
Rental Yields
House Price Indices
Square Metre Prices
Tax and Buying Guides