During the year to Q2 2019:

  • The global real estate boom continues, but is weakening. Real house prices (i.e., prices adjusted for inflation) rose in 26 out of the 46 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, and declines in only 5 countries.
  • However 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 1.46% during the year to Q2 2019 (inflation-adjusted). And according to FHFA numbers, U.S. housing markets fell slightly in the latest quarter.
  • More than half of our surveyed housing markets showed weaker momentum in Q2 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-Pacific appears weakened by the trade war. 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 the year to Q2 2019 included: Puerto Rico (+13.24%), Montenegro (+11.68%), Sri Lanka (+10.64%), Chile (+9.05%), and Germany (+8.21%), using inflation-adjusted figures.

The biggest y-o-y house-price declines were in Egypt (-21.51%), Turkey (-12.1%), Dubai, UAE (-6.86%), Kiev, Ukraine (-5.45%), and Pakistan (-4.35%), again using inflation-adjusted figures.

Momentum is weaker. Only 22 of the world’s housing markets for which figures are available showed stronger upward momentum during the year to Q2 2019, while 24 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. In fact, global housing market momentum has been continuously weakening since Q1 2017.

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:

Puerto Rico is now the strongest housing market in our global survey, with the seasonally-adjusted purchase-only house price index surging by 13.24% during the year to Q2 2019, a sharp improvement from the previous year’s minuscule growth of 0.38%, using inflation-adjusted figures. Quarter-on-quarter, house prices rose by 3.76% in Q2 2019. It is a surprising comeback after several years of house price falls, thanks to the government’s new initiatives, including tax incentives and other housing stimulus measures. Though the wider economy is still struggling and is projected to contract further by 1.1% this year and by another 0.7% in 2020, after 14 years of decline.

All figures that follow are inflation-adjusted.

Montenegro's housing market is growing rapidly, thanks to its booming tourism. The price of new dwellings rose by 11.68% during the year to Q2 2019, in contrast to the previous year’s 5.17% fall. In fact on a quarterly basis, house prices soared 18.24% during the latest quarter. The economy is projected to expand by 2.8% this year, following growth of 4.5% in 2018, 4.7% in 2017, 2.9% in 2016 and 3.4% in 2015.

Sri Lanka continues to perform very well, with nationwide house prices rising by 10.64% during the year to Q2 2019. Quarter-on-quarter, house prices fell by 1.01% 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 3.5% this year, after expansions of 3% in 2018 and 3.3% in 2017.

Chile’s housing market continues to grow stronger, thanks to its robust economy. The average price of new apartments in Greater Santiago surged by 9.05% during the year to Q2 2019, its ninth consecutive quarter of annual price rises. Quarter-on-quarter, house prices rose by 2.72% in Q2 2019. The economy is projected to grow by 3.4% this year and by another 3.2% next year.

Germany’s housing market remains very strong, buoyed by extremely low interest rates. The average price of apartments rose by 8.21% during the year to Q2 2019. On a quarterly basis, house prices increased 1.44% in during the latest quarter. 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 cuts its growth projection this year to 0.5%, half the pace previously forecast.

Source: Various series, data descriptions and sources here

THE WORLD'S REGIONS:

Europe’s house price boom continues

European house price rises continue unabated. In fact, six of the 10 strongest housing markets in our global survey are in Europe. House prices have risen in no less than 14 of the 23 European housing markets for which figures were available during the year to Q2 2019.

After a lackluster performance last year, Montenegro has emerged as the strongest housing market in Europe in our global survey, thanks to the effects of booming tourism. The price of new dwellings rose by 11.68% during the year to Q2 2019, in contrast to the previous year’s 5.17% fall. In fact, house prices soared 18.24% during the latest quarter. The economy is projected to expand by 2.8% this year, following growth of 4.5% in 2018, 4.7% in 2017, 2.9% in 2016 and 3.4% in 2015.

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 8.21% during the year to Q2 2019, following y-o-y growth of 9.23% in Q1 2019, 6.78% in Q4 2018, 5.15% in Q3, and 1.74% in Q2. House prices increased 1.44% in during the latest quarter.

However Germany’s economic growth was disappointing in 2018, with GDP growth of just 1.4%, the country's weakest expansion in five years. Europe’s largest economy continues to struggle this year, with GDP rising by a meagre 0.7% in Q1 and 0.4% in Q2. In fact, the economy is at risk of recession after contracting by 0.1% quarter-on-quarter in Q2 2019, amidst falling exports. The government recently cuts its growth projection this year to 0.5%, half the pace previously forecast.

Austria’s housing market continues to grow stronger, fuelled by surging demand. In Vienna, the residential property price index rose by 7.99% during the year to Q2 2019, a sharp improvement from last year’s 2.24% growth. On a quarterly basis, prices increased 3.98% in Q2 2019. The economy is projected to expand by 2% this year, following growth of 2.7% in 2018, 2.6% in 2017, 2% in 2016 and 1.1% in 2015.

The outlook for North Macedonia’s housing market is very positive.  Strangely enough a major cause is the government's recent decision to change the country's name (from “Macedonia” to “North Macedonia”) in a deal with Greece, which solves a long-standing dispute between the neighboring countries and opens the way for NATO and EU integration.

This is expected to support the country's long-term economic growth and political reforms. During the year to Q2 2019, the nationwide house price index rose by 6.21% - its highest growth in almost a decade. Quarter-on-quarter, house prices increased 6.4% in Q2 2019. The economy is projected to expand by 3.2% this year and 4% in 2020.

Other strong European housing markets include Malta, with house prices rising by 4.93% during the year to Q2 2019, Jersey (4.68%), The Netherlands (4.18%), Slovak Republic (3.74%), and Lithuania (3.04%). All, except Malta, recorded positive quarterly growth during the latest quarter. Slovak Republic, Lithuania and Jersey had stronger performances in Q2 2019 than the previous year.

Minimal annual house price rises were recorded in Estonia (2.59%), Spain (2.08%), Russia (1.83%), Ireland (0.9%) and Iceland (0.8%). Only Estonia and Ireland saw quarterly price growth during the latest quarter. On the other hand, only Russia had a stronger performance during the year to Q2 2019.

Europe’s weakest housing markets

Turkey's housing market continues to struggle, amidst a weak currency (the lira), record high inflation, and political conflict with the US. Nationwide residential property prices fell by 12.1% during the year to Q2 2019, far worse than the previous year’s 5.72% decline. On a quarterly basis, house prices fell by 0.87% during the latest quarter.

Turkey's inflation stood at 16.65% in July 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.

Ukraine's housing market remains depressed, despite improved economic conditions. Secondary market apartment prices in Kiev fell by 5.45% (inflation-adjusted) to an average price of US$ 1,031 per square metre (sq. m.) during the year to Q2 2019, the 23rd consecutive quarter of y-o-y price declines. House prices fell by 1.85% q-o-q in Q2 2019. Currently, house prices in Ukraine are 76% (inflation-adjusted) below their Q3 2008 peak.

Ukraine's economy grew by 4.6% in Q2 2019 from a year earlier, following y-o-y expansions of 2.5% in Q1 2019, 3.5% 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 Switzerland, with house prices falling by 2.52% during the year to Q2 2019, Romania (-2.41%), UK (-1.25%), Finland (-1.11%), Norway (-0.37%), Riga, Latvia (-0.13%) and Sweden (-0.07%). All, except Sweden, Norway and Switzerland, showed weaker performance in Q2 2019 as compared to the previous year. Yet only Romania and Switzerland saw quarterly decline during the latest quarter.

The Asia-Pacific region is losing steam

Nine of the twelve Asia-Pacific housing markets included in our global survey showed weaker momentum in Q2 2019 compared to a year earlier. House prices rose in seven countries; but except for Sri Lanka, the increase was only modest.

Sri Lanka’s housing market is experiencing an extraordinary boom, amidst a surging tourism sector, coupled with weak residential construction. Nationwide house prices rose by 10.64% during the year to Q2 2019, after y-o-y rises of 9.27% in Q1 2019, 13.83% in Q4 2018, 5.28% in Q3, 14.23% in Q2 and 15.38% in Q1. Quarter-on-quarter, house prices fell by 1.01% 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 3.5% this year, from expansions of 3% in 2018 and 3.3% in 2017.

New Zealand’s house prices continue to rise, albeit at a slower pace following the new regulation that bans non-resident foreigners from buying existing homes in the country. Median house prices rose by 2.74% during the year to Q2 2019, a slowdown from a y-o-y growth of 4.3% the previous year. New Zealand's economic growth was 3% in 2018, 2.6% in 2017, 4.2% in 2016, and 4% in 2015. The economy is projected to grow by 2.5% this year and by another 2.9% in 2020.

Modest to minimal annual house prices rises were registered in Thailand (2.59%), Taiwan (2.25%), South Korea (0.97%), Tokyo, Japan (0.94%), and Singapore (0.6%). However, only Taiwan and Singapore saw house price rises during the latest quarter.

Some Asian housing markets are now falling

Pakistan’s high inflation makes it appear that house prices are rising strongly. But this is an illusion. Nationwide house prices actually declined 4.35% during the year to Q2 2019 when adjusted for inflation, though in nominal terms they rose by 4.15%. Quarter-on-quarter, house prices fell 2.21% in Q2 2019 in inflation-adjusted terms. In July 2019, Pakistan’s inflation stood at 10.34%, the highest level since November 2013.

Despite the country’s troubles, Pakistan's 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 2.9% this year.

Macau’s housing market is now cooling rapidly, as slower economic growth in Mainland China has hit Macau’s gaming sector. The average transaction price of residential units fell by 2.98% during the year to Q2 2019, in contrast to a y-o-y rise of 6.68% a year earlier - the first annual decline since Q3 2016. Quarter-on-quarter, house prices rose 1.4% during the latest quarter.

China's housing market continues to struggle, with new regulatory and monetary policies impacting developers and speculative buyers. In Shanghai, the price index of second-hand houses fell by 2.53% during the year to Q2 2019, its seventh consecutive quarter of y-o-y house price falls. During the latest quarter, house prices in Shanghai rose by a minuscule 0.67%.

Hong Kong's housing market boom is now over, with residential property prices falling by 2.44% during the year to Q2 2019, in stark contrast to a y-o-y rise of 13.64% in Q2 2018.  On a quarterly basis, house prices increased 2.64% in Q2 2019. The recent 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. The worsening social unrest in Hong Kong has also negatively affected investor confidence.

Indonesia’s housing market remains sluggish, despite the country's strong economy. Residential prices in the country’s 14 largest cities fell by 1.63% during the year to Q2 2019. House prices fell 1.71% q-o-q during the latest quarter.

The Middle East’s housing markets are struggling, except for Qatar

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. One exception is Qatar, with its house prices rising again.

Egypt remains the weakest housing market in our global survey, with the nationwide real estate index plunging by 21.51% in Q2 2019 from a year earlier, in sharp contrast to a y-o-y rise of 12.17% in Q2 2018. Nominal house prices also fell by 14.15% y-o-y in Q2 2019. However real house prices increased 4.77% 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 projected growth is 5.5% this year and 5.9% in 2020, with various economic reforms expected to support investment and consumption. The government’s IMF-spurred policy reforms have contributed to an upgrade of its sovereign credit rating by Fitch Ratings in March 2019, followed by Moody’s in April 2019.

Other Middle Eastern housing markets are also depressed. In Dubai, residential property prices fell by 6.86% during the year to Q2 2019, the 18th 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 fell by 3.26% q-o-q.

Israel's decade-long house price boom is now over, with government cooling measures intensifying. The nationwide average price of owner-occupied dwellings fell 0.15% during the year to Q2 2019, the fifth consecutive quarter of y-o-y price declines. Israeli house prices rose by a meagre 0.57% q-o-q in Q2 2019.

Surprisingly, Qatar’s housing market is now improving, as the government continues to effectively mitigate the economic and financial fallout of the ongoing blockade. The nationwide real estate price index rose by 1.99% during the year to Q2 2019, in sharp contrast to last year’s 16.84% decline. However property prices fell by 5.66% 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 and Mexico continue to grow stronger while 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 1.46% during the year to Q2 2019 (inflation-adjusted) – the lowest growth since Q3 2012. Real house prices increased 1.52% 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 rose 3.12% y-o-y in Q2 2019 (inflation-adjusted), the lowest growth in almost five years. The FHFA index fell slightly by 0.15% q-o-q during the latest quarter.

Demand and supply continue to rise:

  • Sales of new single-family houses were up 4.3% y-o-y to a seasonally-adjusted annual 635,000 units in July 2019, according to the US Census Bureau.
  • Existing home sales rose only slightly by 0.6% y-o-y to a seasonally-adjusted annual 5.42 million units.
  • New housing starts increased slightly by 0.6% y-o-y to a seasonally-adjusted annual 1,191,000 units in July 2019, while completions were up 6.3% to 1,250,000 units.
  • Building permits for new housing units rose by 1.5% y-o-y to an annualized 1,336,000 units in July 2019.
  • U.S. homebuilder sentiment remains high at 66 in August 2019, a point higher than the previous month, against a background of 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 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, partly due to the ongoing trade war.

House prices in Canada's eleven major cities fell by 1.48% during the year to Q2 2019, its second consecutive quarter of y-o-y declines, amidst the introduction of several rounds of market-cooling measures in recent years. It was the market’s worst performance since Q2 2009. Quarter-on-quarter, house prices rose slightly by 0.53% in Q2 2019.

Despite this, demand is rising again. Sales were up 12.6% in July 2019 from a year earlier mainly driven by gains in the Lower Mainland of British Columbia, Calgary, Edmonton, the GTA and Hamilton-Burlington, Ottawa and Montreal, according to CREA, and in contrast to a 11.2% decline in sales in 2018. As such, the Canadian Real Estate Association (CREA) now expects home sales to edge up 1.2% to 463,000 units this year – an upward revision from its initial forecast of a 1.6% drop in sales.

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. Bank of Canada (BoC) expects economic growth to slow further to 1.3% this year, amidst ongoing trade conflicts and competitiveness challenges. In July 2019, the BoC kept its key rate unchanged at 1.75%, after raising it five times since July 2017, in an effort to buoy the economy.

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 surged by 9.05% during the year to Q2 2019, its ninth consecutive quarter of annual price rises. Quarter-on-quarter, house prices rose by 2.72% in Q2 2019.

Mexico’s housing market continues to rise, with the nationwide house price index rising by 4.78% during the year to Q2 2019, up from growth of 3.93% in the same period last year. On a quarterly basis, house prices rose 2.31% during the latest quarter.

Brazil's housing market continues to struggle, despite improving economic conditions. In Sao Paulo, house prices fell by 1.28% y-o-y in Q2 2019, from annual declines of 2.41% in Q1 2019, 1.86% in Q4 2018, 2.54% in Q3, and 2.36% in Q2. On a quarterly basis, house prices in Sao Paulo fell by 0.1% in Q2 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 0.94% during the year to Q2 2019, after y-o-y declines of 1.06% in Q1 2019, 0.24% in Q4 2018, 0.72% in Q3, 0.46% in Q2 and 0.45% in Q1. On a quarterly basis, house prices increased slightly by 0.16% in Q2 2019.

South Africa's economy contracted by 3.2% in Q1 2019, the biggest quarterly fall since Q1 2009. Recently, the South African Reserve Bank (SARB), the country's central bank, has slashed its 2019 growth projection to 1%, from its earlier estimate of 1.3%.  In 2018, the economy grew by a minuscule 0.8%, following a 1.3% expansion in 2017.

Puerto Rico’s housing market bounced back strongly

Puerto Rico’s housing market is recovering fast, after several years of house price falls. The seasonally-adjusted purchase-only house price index soared 13.24% during the year to Q2 2019, a sharp improvement from the previous year’s miniscule growth of 0.38%. Quarter-on-quarter, house prices rose by 3.76% in Q2 2019.

Demand is rising again, thanks to new initiatives, including tax incentives and other housing stimulus measures. Insurance and federal aid money is coming in, coupled with growing interest from Americans looking for a bargain. Yet the wider economy is still struggling and is projected to contract further by 1.1% this year and by another 0.7% in 2020, after 14 years of decline, according to the IMF.