During the year to Q3 2019:

  • The global real estate boom continues strong. However after six years of strong house price growth, the U.S. housing market is now cooling. The S&P/Case-Shiller seasonally-adjusted national home price index rose by just 1.48% during the year to Q3 2019 (inflation-adjusted), the lowest growth since Q3 2012. FHFA figures also showed similar trend.
  • Strong house price surges are taking place in European countries whose house prices previously lagged, such as Germany and Portugal.
  • Real house prices (i.e., prices adjusted for inflation) rose in 29 out of the 45 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 36 countries, and declines in only 9 countries.
  • Twenty-eight of the 45 surveyed housing markets showed stronger momentum in Q3 2019 compared to the previous year.

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, as well as 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 the year to Q3 2019 included: Puerto Rico (+10.59%), Germany (+9.46%), Portugal (+7.92%), Slovak Republic (+6.67%), and Chile (+6.5%), using inflation-adjusted figures.

The biggest y-o-y house-price declines were in Egypt (-9.58%), Pakistan (-8.13%), Qatar (-7.78%), Kiev, Ukraine (-5.79%), and Hong Kong (-5.37%), again using inflation-adjusted figures.

Momentum is still strong. 28 of the world’s housing markets for which figures are available showed stronger upward momentum during the year to Q3 2019, while 17 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:

Puerto Rico remains the strongest housing market in our global survey, with the seasonally-adjusted purchase-only house price index surging by 10.59% during the year to Q3 2019, in contrast to the previous year’s y-o-y decline of 3.76%, using inflation-adjusted figures. However quarter-on-quarter, house prices fell by 2.66% in Q3 2019.

All figures that follow are inflation-adjusted.

Germany’s housing market continues to grow stronger, thanks to extremely low interest rates. The average price of apartments rose by 9.46% during the year to Q3 2019, more than last year’s 5.15% growth. In fact it was the strongest growth since Q2 2016. On a quarterly basis, house prices rose 3.34% in Q3 2019.

Portugal’s housing market is now growing even more strongly, fuelled by surging demand as well as improved economic conditions. Property prices in Portugal rose by 7.92% during the year to Q3 2019, up from y-o-y increases of 7.38% in Q2 2019, 5.96% in Q1 2019, 5.39% in Q4 2018 and 4.7% in Q3 2018. House prices increased 2.47% q-o-q in Q3 2019.

All regions of Portugal 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. Recently, the IMF raised its 2019 growth projection for the Portuguese economy to 1.9%, from the earlier forecast of 1.7%.

The Slovak Republic’s housing market is strengthening, despite an economic slowdown. Nationwide house prices rose by 6.67% during the year to Q3 2019, a sharp rise from the previous year’s 1.37% growth and the biggest expansion since Q1 2017. During the latest quarter, residential property prices were up 2.55% from the previous quarter. The economy is projected to expand by 2.7% this year, down from growth of 4% in 2018 and 3.2% in 2017.

In Chile the average price of new apartments in Greater Santiago rose by 6.5% during the year to Q3 2019, up from a growth of 4.29% in Q3 2018. House prices increased slightly by 0.24% q-o-q during the latest quarter. However the ongoing social unrest is expected to dampen the market.

Source: Various series, data descriptions and sources here

THE WORLD'S REGIONS:

No end in sight for Europe’s house price boom

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 17 of the 23 European housing markets for which figures were available during the year to Q3 2019.

Germany has emerged as the strongest housing market in Europe in our global survey, thanks to extremely low interest rates. The average price of apartments rose strongly by 9.46% during the year to Q3 2019, up from last year’s 5.15% growth. In fact, it was the highest y-o-y growth since Q2 2016. House prices increased 3.34% 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.

However Germany’s economic growth was disappointing in 2018, with GDP growth of just 1.4%, the country's weakest expansion in five years. This year Germany's GDP rose by a meagre 0.7% in Q1, 0.4% in Q2 and 0.5% in Q3. On a quarterly basis, the economy barely grew by 0.1% in Q3 2019, narrowly avoiding technical recession following a 0.2% contraction the previous quarter. Germany’s export-reliant economy was hit by the falling global demand for capital goods, with political uncertainty and structural changes in the automotive industry adding to the burden. The government recently cut its growth projection this year to 0.5%, half the pace previously forecast.

Portugal’s housing market continues to strengthen, fuelled by surging demand as well as improved economic conditions. Property prices in Portugal rose by 7.92% during the year to Q3 2019, up from y-o-y increases of 7.38% in Q2 2019, 5.96% in Q1 2019, 5.39% in Q4 2018, and 4.7% in Q3 2018. House prices increased 2.47% q-o-q in Q3 2019.

All regions of Portugal have 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 number and value of housing transactions rose by 16.6% and 24.4%, respectively, last year. Recently, the IMF raised its 2019 growth projection for the Portuguese economy to 1.9%, from the earlier forecast of 1.7%.

Slovak Republic’s housing market is strengthening, despite a slowing economy. Nationwide house prices rose by 6.67% during the year to Q3 2019, a sharp improvement from the previous year’s 1.37% growth and the biggest expansion since Q1 2017. During the latest quarter, residential property prices were up 2.55% from the previous quarter.

In Q3 2019, the Slovak Republic’s economic growth eased to 1.3% year-on-year, the lowest reading since Q2 2013. The economy is projected to expand by 2.7% this year, down from growth of 4% in 2018 and 3.2% in 2017, according to the European Commission.

Other strong European housing markets include Vienna, Austria, with house prices rising by 6.14% during the year to Q3 2019, Jersey (5.58%), North Macedonia (5.28%), Tallinn, Estonia (4.72%), The Netherlands (4.41%), Lithuania (4.05%), Russia (3.63%), Malta (3.41%) and Sweden (2.09%). All, except North Macedonia and Malta, recorded positive quarterly growth during the latest quarter. All, except Malta and The Netherlands had stronger performances in Q3 2019 than the previous year.

There were minimal annual house price rises in Romania (0.75%), Norway (0.69%), Riga, Latvia (0.46%), Iceland (0.32%), and Ireland (0.23%). All, except Norway, saw quarterly price growth during the latest quarter. On the other hand, only Romania and Norway had stronger performance during the year to Q3 2019.

Europe’s weakest housing markets

Ukraine's housing market remains depressed, although the economy is strengthening. Secondary market apartment prices in Kiev fell by 5.79% (inflation-adjusted) to an average price of US$ 1,021 per square metre (sq. m.) during the year to Q3 2019, the capital's 24rd consecutive quarter of y-o-y price declines. House prices fell by 1.24% q-o-q in Q3 2019.

House prices have been falling in the past five 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% (inflation-adjusted) below their Q3 2008 peak of US$3,627 per sq. m.

Ukraine's economy grew by 4.2% y-o-y in Q3 2019, following annual expansions of 4.6% in Q2 2019, 2.5% in Q1 2019, 3.5% in Q4 2018, and 2.8% in Q3 2018. The National Bank of Ukraine recently raised its economic growth forecast for this year to 3.5%, thanks to robust domestic demand, agricultural growth, and better trade conditions.

Other weak European housing markets included Montenegro, with house prices falling by 3.12% during the year to Q3 2019, Turkey (-2.7%), Switzerland (-2.25%), UK (-1.44%), and Finland (-0.48%). Only Montenegro and the UK showed weaker performance in Q3 2019 as compared to the previous year. All, except Switzerland and the UK, saw quarterly declines during the latest quarter.

The Asia-Pacific region is two-tiered

Only five of the twelve Asia-Pacific housing markets included in our global survey showed stronger momentum in Q3 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 continue to rise, despite the new ban on non-resident foreigners buying existing homes. Median house prices rose by 5.82% during the year to Q3 2019, up from the previous year’s 3.93% growth. On a quarterly basis, real house prices increased 1.36% in Q3 2019.

Both demand and supply are falling. The number of dwellings sold in New Zealand fell by 4% y-o-y to 6,801 units in October 2019, according to the Real Estate Institute of New Zealand (REINZ). Likewise, properties available for sale fell by 13.1% y-o-y to 22,313 units in October 2019.

For the last five years, New Zealand's economic performance has been strong, with growth of 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 further by 2.5% this year and by another 2.7% in 2020.

Japan’s housing market is gaining momentum, amidst strong demand coupled with falling supply. The average price of existing condominiums in Tokyo rose by 4.46% during the year to Q3 2019, a sharp improvement from a y-o-y growth of just 0.22% the previous year. During the latest quarter, existing condominium prices rose by 1.67%.

The average price of new condominiums in Tokyo surged by 13.9% y-o-y in Q3 2019, in stark contrast to a decline of 6.55% a year earlier. Existing condominium sales in Tokyo rose by 5.1% y-o-y during the first three quarters of 2019, while sales of existing detached houses increased 8.1%, according to The Land Institute of Japan.

In contrast, dwelling starts in Japan fell by 2% over the same period. The Japanese economy is expected to expand by 0.9% this year and by 0.5% in 2020, after annual growth of 0.8% in 2018 and 1.9% in 2017.

There were modest house price rises in Thailand (3.09%), Taiwan (2.86%), Singapore (1.67%), Sri Lanka (1.34%) and South Korea (0.88%). However, only Thailand 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 still rising. But this is an illusion. Nationwide house prices actually declined 8.13% during the year to Q3 2019 when adjusted for inflation, though in nominal terms they rose by 3.39%. Quarter-on-quarter, house prices fell by 2.75% in Q3 2019 in inflation-adjusted terms. In September 2019, Pakistan’s inflation stood at 12.55%, the highest level in eight years.

Despite the country’s troubles, Pakistan's economy grew by a robust 5.5% in 2018, after expanding by 5.2% in 2017, 4.6% in 2016, and 4.1% in both 2014 and 2015. Economic growth is projected to slow to around 3.3% this year.

Hong Kong’s housing market boom has paused, with residential property prices falling by 5.37% during the year to Q3 2019, in stark contrast to a y-o-y rise of 11.28% in Q3 2018. On a quarterly basis, house prices fell 3.96% in Q3 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 negatively affected investor confidence. Hong Kong’s economy slipped into recession, with GDP contraction of 0.4% in Q2 2019 and 3.2% in Q3 2019. Chief Executive Carrie Lam has warned of a possible full-year contraction this year – worse than the government’s estimate of a 0% to 1% growth.

Other weak Asia-Pacific housing markets included Beijing, China, with house prices falling by 4.04% during the year to Q3 2019, Macau (-3.65%) and Indonesia (-1.98%). All saw quarterly declines during the latest quarter. Also, all, except China, showed weaker performance in Q3 2019 as compared to the same period last year.

The Middle East’s housing markets are struggling

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 Qatar. 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. Its nationwide real estate index fell by 9.58% in Q3 2019 from a year earlier (nominal prices fell 5.26% y-o-y), following y-o-y falls of 21.51% in Q2 2019, 22.61% in Q1 2019, 19.24% in Q4 2018 and 10.06% in Q3 2018. Real house prices fell 0.55% 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.

Qatar’s housing market remains fragile, 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 7.78% during the year to Q3 2019, following y-o-y rises of 1.99% in Q2 2019, 1.43% in Q1 2019 and annual declines of 2.38% in Q4 2018 and 3.65% in Q3 2018. Property prices fell by 4.89% q-o-q during the latest quarter.

In Dubai, residential property prices fell by 4.52% during the year to Q3 2019, the 19th 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 0.31% q-o-q.

After a pause in Israel's decade-long house price boom following government measures to restrain house price rises, Israel's market direction seems uncertain. The nationwide average price of owner-occupied dwellings increased by a minuscule 0.3% during the year to Q3 2019, following y-o-y declines of 0.15% in Q2 2019, 2.01% in Q1 2019, 2.98% in Q4 2019 and 1.8% in Q3 2018. Israeli house prices rose by 1.11% q-o-q in Q3 2019.

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 weak.

After six years of strong house price growth, the U.S. housing market is cooling. There was a 1.48% rise in the S&P/Case-Shiller seasonally-adjusted national home price index during the year to Q3 2019 (inflation-adjusted), a sharp slowdown from the previous year’s 3.1% growth and the lowest growth since Q3 2012. Real house prices increased by 0.4% 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 Q3 2019 (inflation-adjusted), the lowest growth in five years. The FHFA index rose by 0.83% q-o-q during the latest quarter.

However housing demand and supply continue to rise. Sales of new single-family houses were up 31.6% y-o-y to a seasonally-adjusted annual rate of 733,000 units in October 2019. Likewise, existing home sales rose by 4.6% y-o-y to 5.46 million units in October 2019.

New housing starts rose by 8.5% y-o-y to a seasonally-adjusted annual rate of 1,266,000 units in October 2019, while completions were up 12.4% to 1,256,000 units. U.S. homebuilder sentiment remains high at 70 in November 2019, a point lower than the previous month, against a backdrop 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 2.9% in 2018 from a year earlier, the fastest pace since 2005. However, the world’s biggest economy is expected to slow in coming years, with projected GDP growth rates of 2.4% this year and 2.1% in 2020, partly due to the ongoing trade war.

House prices in Canada's eleven major cities fell by 1.19% during the year to Q3 2019, the third consecutive quarter of y-o-y declines, amidst the introduction of several rounds of market-cooling measures in recent years. Quarter-on-quarter, house prices rose by 1.3% in Q3 2019.

Despite this, demand is rising again. Sales were up 12.9% in October 2019 from a year earlier, in contrast to an 11.2% decline in sales in 2018, according to the Canadian Real Estate Association (CREA). Sales transactions increased from a year ago in 80% of all local markets, including all of Canada’s largest urban markets. In contrast, housing starts rose by a minuscule 0.2% y-o-y in the first three quarters of 2019 while completions dropped 3.8%.

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 1.5% this year, amidst ongoing trade conflicts and competitiveness challenges. In October 2019, 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 grow stronger; Brazil remains weak

Chile’s housing market remains robust, despite the introduction of a property sales tax two years ago. The average price of new apartments in Greater Santiago rose strongly by 6.5% during the year to Q3 2019, following y-o-y rises of 9.05% in Q2 2019, 5.04% in Q1 2019, 6.94% in Q4 2018 and 4.29% in Q3 2018. On a quarterly basis, house prices increased slightly by 0.24% in Q3 2019.

Chile’s economy grew by 3.3% y-o-y in Q3 2019, up from annual growth of 1.9% in Q2, and 1.6% in Q1.

However, the protests that began in early-October 2019 sparked by a rise in metro fares have dampened prospects for the remainder of the year, prompting the government to lower its economic growth forecast for 2019 to a range of 1.8% to 2.2%.

Mexico’s housing market is strengthening, despite ailing economy. The nationwide house price index rose by 4.96% during the year to Q3 2019, the biggest increase since Q2 2016. On a quarterly basis, house prices increased 1.21% during the latest quarter.

Brazil’s housing market remains weak, despite improving economic conditions. In Sao Paulo, house prices fell by 0.88% during the year to Q3 2019, from annual declines of 1.29% in Q2 2019, 2.41% in Q1 2019, 1.89% in Q4 2018, and 2.52% in Q3 2018. On a quarterly basis, house prices in Sao Paulo were almost unchanged in Q3 2019.

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 10.59% during the year to Q3 2019, in contrast to the previous year’s y-o-y decline of 3.76%, using inflation-adjusted figures. However quarter-on-quarter, house prices fell by 2.66% in Q3 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. Insurance and federal aid money is coming in, coupled with growing interest from Americans looking for a bargain. Yet Puerto Rico's 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 depression.