During the year to Q1 2020:

• Global housing markets remained strong during the year to March, especially in Europe. Real house prices (i.e., prices adjusted for inflation) rose in 29 out of the 50 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 38 countries, and declines in only 12 countries.
• Strong house price surges were taking place in European countries whose house prices previously lagged, such as Germany and Portugal.
• After seven years of strong house price growth, the U.S. housing market remained surprisingly vibrant. The S&P/Case-Shiller seasonally-adjusted national home price index rose by 2.77% during the year to Q1 2020 (inflation-adjusted), an improvement from the previous year’s 1.78% growth. The Federal Housing Finance Agency’s seasonally-adjusted purchase-only U.S. house price index rose by 3.52% y-o-y in Q1 2020 (inflation-adjusted), at par with the previous year’s 3.63% growth.
• Twenty-five of the 50 surveyed housing markets showed stronger momentum in Q1 2020 compared to the previous year.

In normal times such backward-looking data would be a useful indicator of what’s coming next, as real estate markets are highly momentum driven. Transaction volumes have clearly suffered an enormoushit from lockdowns and travel restrictions associated with the COVID-19 pandemic.  What’s happening to property prices is still unclear, but they will surely be impacted by any longer-term damage to the world’s economies. Recently, the International Monetary Fund (IMF) revised down its 2020 forecast for the global economy to a contraction of 3%, from its earlier projection of 3.3% growth.

The pre-impact situation amazes one by the sheer strength of house price rises in some countries, especially in Europe.

The strongest housing markets in our global house price survey during the year to Q1 2020 included: Portugal (+16.37%), Germany (+12%), New Zealand (+10.87%), Romania (+9.51%), and Poland (+8.67%), using inflation-adjusted figures.

The biggest y-o-y house-price declines were in Egypt (-34.14%), Puerto Rico (-8.8%), Montenegro (-8.2%), Pakistan (-6.74%), and Dubai, UAE (-5.06%), again using inflation-adjusted figures.

Momentum is mixed: 25 of the world’s housing markets for which figures are available showed stronger upward momentum during Q1 2020, while 24 housing markets showed weaker momentum, according to Global Property Guide’s research. The U.S. showed mixed results, with the S&P/Case-Shiller HPI registering stronger momentum while the FHFA index pointing to the opposite direction. 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:

Portugal has emerged as the strongest housing market in our global house price survey, with house prices surging by 16.37% during the year to Q1 2020, up from a growth of 14.21% a year ago, using inflation-adjusted figures. It was the highest annual increase ever recorded. On a quarterly basis, house prices rose by 4.98% in Q1 2020.

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 12% during the year to Q1 2020, up from last year’s 9.23% growth. House prices increased 3.78% during the latest quarter.

New Zealand’s house prices continue to rise strongly, as the impact of the ban on non-resident foreign homebuyers wanes. Median house prices surged 10.87% during the year to Q1 2020, following y-o-y rises of 10.28% in Q4 2019, 5.82% in Q3, 2.74% in Q2, and 8.76% in Q1. On a quarterly basis, real house prices increased 2.55% in Q1 2020.

Romania’s housing market has been strengthening, with the average selling price of apartments rising by 9.51% during the year to Q1 2020, a sharp turnaround from the prior year’s 1.08% y-o-y decline. House prices increased 1.06% q-o-q during the latest quarter.

Poland’s housing market remains robust, amidst strong demand coupled with supply shortages. The average price of existing flats in Poland’s 7 big cities rose by 8.67% during the year to Q1 2020, a slight increase from the prior year’s 8.55% growth. Quarter-on-quarter, house prices were up slightly by 0.31% in Q1 2020.

Source: Various series, data descriptions and sources here

THE WORLD'S REGIONS:

Europe’s great house price boom strengthens

Europe’s house price boom continues unabated. Four of the five strongest housing markets in our global survey are in Europe. House prices have risen in no less than 18 of the 23 European housing markets for which figures were available during the year to Q1 2020.

Portugal’s housing market continues to grow stronger, amidst surging demand buoyed by low interest rates. Nationwide property prices rose by a record 16.37% during the year to Q1 2020, following y-o-y increases of 14.09% in Q4 2019, 15.21% in Q3, 14.45% in Q2 and 14.21% in Q1. House prices increased 4.98% q-o-q in Q1 2020.

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 shrank by 2.3% in Q1 2020 from a year earlier, the first decline in seven years, according to the Instituto Nacional de Estatistica (INE). The government expects the economy to contract by 7% this year, reflecting the impact of the coronavirus pandemic which prompted the country to introduce isolation measures in March.

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 12% during the year to Q1 2020, following y-o-y rises of 11.15% in Q4 2019, 9.46% in Q3, 8.21% in Q2, and 9.23% in Q1. House prices increased 3.78% 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, the German economy plunged into recession at the start of 2020, with real GDP shrinking by 2.2% in Q1 2020 following a 0.1% decline in Q4 2019, the biggest quarterly drop since the 2008 financial crisis. The economy is projected to contract by 6.5% this year, following a minuscule growth of 0.6% in 2019, according to the European Commission.

Other strong European housing markets include Romania, with house prices rising by 9.51% during the year to Q1 2020, Poland (8.67%), Slovak Republic (5.66%), Lithuania (5.22%), Netherlands (4.98%), Russia (4.59%), Estonia (4.32%), and Sweden (4.16%). All recorded positive quarterly growth during the latest quarter. All, except The Netherlands, had stronger performances in Q1 2020 compared to the previous year.

There have been modest annual house price rises in Iceland (3.31%), Turkey (2.82%), Macedonia (2.66%), Jersey (2.48%), and Vienna, Austria (1.87%). All except Jersey saw quarterly price growth during the latest quarter. Moreover, all, except Austria, performed better in Q1 2020 compared to a year earlier.

European housing markets that are almost steady included Riga, Latvia, with house prices rising by a minimal 0.83% during the year to Q1 2020, Norway (0.75%), and Ireland (0.29%). Only Norway recorded quarterly price growth during the latest quarter, though both Norway and Latvia had stronger performances during Q1 2020 as compared to a year earlier.

The UK’s housing market is gradually improving. Real house prices rose by 0.75% during the year to Q1 2020, an improvement from the previous year’s 1.36% decline and its best performance since Q1 2017. Quarter-on-quarter, real house prices increased slightly by 0.83% during the latest quarter. Wales was the best performing region during the year to Q1 2020, with real house prices rising by 4.62%, followed by Yorkshire and the Humber (2.59%) and North West (2.42%). London real house prices fell by 0.65%.

The UK’s real GDP shrank by 2% quarter-on-quarter in Q1 2020, the biggest decline since Q4 2008, according to the Office for National Statistics (ONS). The second quarter is expected to be much worse - the Bank of England projects that the UK economy will shrink by a huge 14% this year, the biggest annual contraction since a decline of 15% in 1706.

Europe’s weakest housing markets

Montenegro’s housing market continues to struggle, mainly due to low demand from Russian buyers. The price of new dwellings fell by 8.2% during the year to Q1 2020, following the previous year’s 12.61% decline. House prices fell a whopping 16.89% during the latest quarter. The COVID-19 pandemic is expected to aggravate the already bad situation and may send the tourism-dependent economy into a deep recession this year, with the IMF projecting an economic contraction of 9% for the full year of 2020.

Other weak European housing markets included Kiev, Ukraine, with house prices falling by 2.74% during the year to Q1 2020, Finland (-1.09%), Switzerland (-1%), and Malta (-0.15%), though only in Malta and Finland did the housing market perform more weakly during Q1 2020 than the previous year. Only Switzerland saw quarterly decline during the latest quarter.

The Asia-Pacific region is cooling rapidly

Only three of the fourteen Asia-Pacific housing markets included in our global survey showed stronger momentum in Q1 2020 compared to a year earlier. House prices rose in only five countries, and the increase was only modest except in New Zealand.

New Zealand’s house prices have continued to rise strongly, as the impact of the ban on non-resident foreign homebuyers has waned. Median house prices surged 10.87% during the year to Q1 2020, following y-o-y rises of 10.28% in Q4 2019, 5.82% in Q3, 2.74% in Q2, and 8.76% in Q1. On a quarterly basis, real house prices increased 2.55% in Q1 2020.

Despite this, demand deteriorated in recent months due to COVID-19 lockdowns. Property sales in New Zealand plummeted by a whopping 78.5% y-o-y to just 1,305 units in April 2020, according to the Real Estate Institute of New Zealand (REINZ). Likewise, the number of properties available for sale fell by 29.3% to 19,702 units in April 2020 from a year earlier – the lowest level of inventory for the month of April since records began.

For the last six years New Zealand's economic performance has been robust, with growth of 2.2% in 2019, 3.2% in 2018, 3.8% in 2017, 4.2% in 2016, 4.1% in 2015 and 3.2% in 2014. However, economic activity is projected to decline by as much as 7.2% this year, as the effect of lockdowns and travel restrictions associated with the COVID-19 pandemic hits, based on IMF projections.

Surprisingly, Thailand’s housing market had been strengthening, despite deteriorating economic conditions. Nationwide house prices rose by 5.69% during the year to Q1 2020, a sharp improvement from the previous year’s 2.21% increase and the biggest growth since Q1 2018. House prices increased 3.13% q-o-q during the latest quarter.

Thailand’s economy contracted by 1.8% in Q1 2020 from a year earlier, the deepest decline since Q4 2011 – pushing the country into recession, as the pandemic hit domestic activity and tourism. As such, the National Economic and Social Development Council (NESDC) recently slashed its forecast for 2020 to a contraction of 5% to 6%, from its earlier projection of a growth of 1.5% to 2.5%.

There were modest to minimal house price rises in Taiwan (2.7%), Singapore (2.4%), and South Korea (0.7%). Both Taiwan and South Korea saw house price rises during the latest quarter. Yet only Taiwan performed more strongly in Q1 2020 than a year earlier.

Most Asian housing markets are now struggling

Pakistan’s high inflation makes it appear that house prices are still rising. But this is an illusion. Nationwide house prices actually declined 6.74% during the year to Q1 2020 when adjusted for inflation, though in nominal terms they rose by 3.27%. Quarter-on-quarter, house prices fell by 1.36% in Q1 2020 in inflation-adjusted terms. After registering an eight-year high of 14.6% in January 2020, Pakistan’s inflation slowed to 8.5% in April 2020.

Pakistan’s economy contracted by 0.38% during the fiscal year 2019-20, compared to a 1.91% growth in 2018-19, mainly due to economic stabilization policies that hit the industrial sector, coupled with the adverse effects of the COVID-19 outbreak, according to the National Accounts Committee.

In China, even before the emergence of the 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 4.88% during the year to Q1 2020, following y-o-y declines of 4.69% in Q4 2019, 4.04% in Q3, 2.47% in Q2, and 2.3% in Q1. During the latest quarter (Q1), house prices in Beijing fell by 0.84%.

Chinese Premier Li Keqiang has confirmed that for the first time, China will not set an economic growth target in 2020. Economic activity tumbled by 6.8% in Q1 2020 from a year earlier due to COVID-19 related shutdowns and travel restrictions.Despite the country’s apparent recovery from the epidemic, China’s economic growth is expected to fall to its slowest pace in nearly half a century.

Hong Kong’s housing market continues to suffer, amidst 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 fell by 3.12% y-o-y in Q1 2020, in contrast to an annual rise of 0.28% a year earlier. On a quarterly basis, house prices fell by 0.94% in Q1 2020.

After months of violent protests, the US-China trade war, and the arrival of COVID-19, Hong Kong’s economy declined by 8.9% in Q1 2020 from a year earlier – its worst drop since records began in 1974. The IMF forecasts that the HK economy will shrink by 5.8% this year.

Other weak Asia-Pacific housing markets included Macau, with house prices falling by 2.26% during the year to Q1 2020, Makati CBD, Philippines (-1.65%), Sri Lanka (-1.44%), Indonesia (-1.2%), and Tokyo, Japan (-0.23%). All showed weaker performance in Q1 2020 as compared to a year earlier. Only Philippines and Sri Lanka saw quarterly rises in Q1 2020.

The Middle East remains depressed, but Israel is an exception

The Middle East’s housing markets have been struggling for several years now, due to plummeting oil prices and the ongoing political and diplomatic crisis. Now, the coronavirus pandemic has aggravated the situation.

Egypt’s housing market is now the weakest housing market in our global survey, with the nationwide real estate index plunging by a whopping 34.14% during the year to Q1 2020, worse than the previous year’s 22.61% y-o-y decline. Real house prices fell sharply by 29.67% 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.

On a positive note, Egypt is one of the only two countries in the MENA region whose economy the IMF expects to grow in 2020, at a rate of 2%.

The UAE’s housing market remains dismal, amidst a huge supply glut of both apartments and oil. In Dubai, residential property prices fell by 5.06% during the year to Q1 2020, at par from the previous year’s 5% decline. During the latest quarter, house prices in Dubai fell slightly by 0.68% q-o-q. The UAE’s overall economy is forecast to contract by 3.5% this year, following 2.9% growth in 2019, mainly due to the crude oil price crash caused by the COVID-19 outbreak, according to the IMF.

Qatar’s housing market continues to struggle, 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 3.67% during the year to Q1 2020, in contrast to a y-o-y growth of 1.43% recorded in Q1 2019. Property prices fell by 1.15% during the latest quarter.

The Qatari economy is projected to decline by 4.3% this year, following an almost zero growth in 2019, according to the IMF.

Morocco’s housing market is losing momentum, amidst falling transactions and a continuously shrinking mortgage market. The nationwide residential real estate price index fell by 2.93% during the year to Q1 2020, worse than the minuscule growth of 0.17% recorded in Q1 2019. On a quarterly basis, house prices dropped 1.47% in Q1 2020. The Moroccan economy is expected to shrink by 3.7% this year, the first decline since 1997.

Israel is an exception! The nationwide average price of owner-occupied dwellings rose by 4.14% during the year to Q1 2020, in contrast to a y-o-y decline of 2.01% the previous year. Israeli house prices rose by 1.77% q-o-q in Q1 2020. Recently, the Bank of Israel revised its 2020 economic forecast for the country to -4.5%, an improvement from its previous estimate of -5.3%.

The Americas: US and Canada remain healthy, but outlook uncertain

U.S. house prices have continued to rise and Canada's housing market has been gaining momentum again, but the outlook for both countries is now gloomy as the COVID-19 outbreak, and the subsequent lockdowns, have paralyzed the market.

In Latin America, housing markets in Mexico and Chile have continued to rise while Brazil and Peru remain weak.

After seven years of strong house price growth, the U.S. housing market remains surprisingly vibrant. The S&P/Case-Shiller seasonally-adjusted national home price index rose by a modest 2.77% during the year to Q1 2020 (inflation-adjusted), an improvement from the previous year’s 1.78% growth. Real house prices increased slightly by 0.77% during the latest quarter.

The Federal Housing Finance Agency’s seasonally-adjusted purchase-only U.S. house price index rose by 3.52% y-o-y in Q1 2020 (inflation-adjusted), at par with the prior year’s 3.63% growth. The FHFA index rose by 1.24% q-o-q during the latest quarter.

However both housing demand and supply are now falling, mainly due to the economic fallout from the coronavirus pandemic. Sales of new single-family houses were down 6.2% y-o-y to a seasonally-adjusted annual rate of 623,000 units in April 2020. Likewise, existing home sales plummeted by 17.2% y-o-y to a seasonally-adjusted annual rate of 4.33 million units in April 2020.

New housing starts fell sharply by 29.7% y-o-y to a seasonally-adjusted annual rate of 891,000 units in April 2020, while completions were down 11.8% to 1,176,000 units.

U.S. homebuilder sentiment remainsnegative at 37 in May 2020, sharply down from 66 in May 2019 and a record high of 76 in December 2019, 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 shrank 4.8% in Q1 2020, ending a record streak of expansion, amidst social distancing restrictions and lockdowns. It was the first contraction since Q1 2014 and the biggest quarterly decline since Q4 2008. The world’s biggest economy is expected to shrink by 5.9% this year, the first contraction in 11 years, based on IMF estimates. The unemployment rate surged to a record high of 14.7% in April 2020 and could hit 20% in May.

Canada’s housing market showed some improvements in Q1 2020, as the impact of several rounds of market-cooling measures gradually waned. House prices in the country’s eleven major cities rose by 2.92% during the year to Q1 2020, in contrast to a y-o-y fall of 0.35% in the previous year and its best performance since Q1 2018. Quarter-on-quarter, house prices rose slightly by 0.9% in Q1 2020.

Housing starts rose by 7.1% y-o-y to 39,923 units in Q1 2020 while completions increased 4.8% to 43,694 units over the same period.

However sales were down by 57.6% in April 2020 from a year earlier, due to the pandemic - the lowest April sales figure since 1984, according to the Canadian Real Estate Association (CREA).

The Conference Board of Canada projects the Canadian economy to shrink by 4.3% this year as the country battles plunging oil prices and the fallout from the COVID-19 pandemic. The IMF released a grimmer outlook, forecasting the economy would contract by 6.2%.

Latin America: Mexico and Chile moderating; Brazil and Peru still depressed

Chile’s housing market has remained robust, as interest rates continue to fall and the impact of the property sales tax introduced three years ago has waned. The average price of new apartments in Greater Santiago rose by a modest 4.37% during the year to Q1 2020, slightly lower than the previous year’s 4.9% expansion. On a quarterly basis, house prices increased slightly by 0.26% in Q1 2020. The coronavirus pandemic is expected to drag the economy down, with a projected GDP contraction of 4.4% in 2020 - the first decline since 2009.

Mexico’s nationwide house price index rose by 3.54% during the year to Q1 2020, down from the previous year’s 4.73% growth. On a quarterly basis, house prices rose by 0.26% during the latest quarter (Q1).

The Mexican economy shrank by 0.3% in 2019, the weakest performance in a decade. The country’s economic woes are expected to be extended this year, with a projected GDP decline of 6.6%, according to the IMF.

Peru’s housing market remains weak, with house prices falling by 1.99% during the year to Q1 2020, worse than the previous year’s meager price rise of 0.31%. During the latest quarter, house prices increased slightly by 0.57% q-o-q. The economy is projected to contract by 4.5% this year, the first decline since 1998.

Brazil’s housing market continues to struggle. In Sao Paulo, house prices fell by 2.26% y-o-y in Q1 2020, following annual declines of 1.96% in Q4 2019, 0.88% in Q3, 1.29% in Q2 and 2.41% in Q1. On a quarterly basis, house prices in Sao Paulo fell 1.02% in Q1 2020. The economy grew by a miniscule 1.1% in 2019, and is expected to contract by 4.7% this year, based on government estimates.

South Africa's lethargic housing market

South Africa’s housing market remains sluggish, amidst a depressed macroeconomic environment. The price index for medium-sized apartments fell by 1.22% during the year to Q1 2020, following y-o-y declines of 0.52% in Q4 2019, 0.38% in Q3, 0.99% in Q2, and 1.08% in Q1. On a quarterly basis, house prices were down by 1.45% in Q1 2020.

The South African Reserve Bank (SARB) projects the economy will contract by a huge 7% this year. The economy grew by only 0.2% last year, following expansions of 0.8% in 2018, 1.4% in 2017 and 0.4% in 2016.

Puerto Rico’s housing market continues to suffer

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 8.8% during the year to Q1 2020, in contrast to a y-o-y increase of 4.02% a year earlier, using inflation-adjusted figures. Quarter-on-quarter, house prices fell by 4.03% in Q1 2020.

The Puerto Rican 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 finally grew by 2% last year, 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. However, Puerto Rico’s economy is expected to contract again by 6% this year, mainly due to the repercussions caused by the COVID-19 pandemic.