During the year to Q1 2018:

  • House prices rose in 31 out of the 42 world's housing markets which have so far published housing statistics. House prices fell in 10 countries.
  • The more upbeat nominal figures, more familiar to the public, showed house price rises in 35 countries, and declines in 7 countries.
  • Slightly more than half of the surveyed housing markets showed weaker momentum during the year to Q1 2018 compared to the previous year, suggesting that the boom may be moderating.

Macau, Hong Kong and most of Europe continue to experience strong price rises. There have also been notable positive turnarounds in Egypt, Macedonia and Thailand. But Canada, China, New Zealand, Russia, 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 2018 included: Macau (+20.58%), Puerto Rico (+12.55%), Ireland (+12.51%), Hong Kong (+11.79%), and Egypt (+11.45%), using inflation-adjusted figures.

The biggest y-o-y house-price declines were in Qatar (-9.66%), Kiev, Ukraine (-7.55%), Dubai, UAE (-6.44%), New Zealand (-3.37%), and Norway (-3.01%), again using inflation-adjusted figures.

Momentum. Only 20 of the world's housing markets for which figures are available showed stronger upward momentum during the year to Q1 2018, while 22 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). Momentum has weakened in just over half the housing markets covered in our survey.

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:

Macau is now the strongest housing market in our global survey, up from fourth place the previous quarter. The average transaction price of residential units rose by 20.58% during the year to Q1 2018, following y-o-y rises of 9.24% in Q4 2017, 10.7% in Q3, 31.52% in Q2 and 23.36% in Q1. House prices increased strongly by 5.22% q-o-q during the latest quarter, using inflation-adjusted figures. Macau’s housing market is buoyed by massive infrastructure investments, which will transform Macau's connections to China and Hong Kong.

All figures that follow are inflation-adjusted.

Puerto Rico made a surprise comeback with the seasonally-adjusted purchase-only house price index rising by 12.55% in Q1 2018 from a year earlier, after a y-o-y rise of 6.18% in Q4 2017 and annual declines of 2.8% in Q3 and 12.38% in Q2. Quarter-on-quarter, house prices rose strongly by 6.16% during the latest quarter. The strong house price increase is surprising given the country’s continued economic woes, high unemployment, massive emigration, and a near-catastrophic national debt crisis and credit rating downgrades. House prices fell by 37% from Q2 2007 to Q2 2017. 

With Ireland's economy growing by 7.3% last year, it is not surprising that the housing market is growing at breakneck speed. Residential property prices were up by 12.51% during the year to Q1 2018, after y-o-y rises of 11.7% in Q4 2017, 11.75% in Q3, 11.8% in Q2, and 9% in Q1. During the latest quarter, Irish house prices increased 1.38% in Q1 2018. Ireland’s surging house prices are mainly driven by strong demand as well as supply shortages.

Hong Kong's residential property prices surged 11.79% during the year to Q1 2018, after y-o-y rises of 12.78% in Q4 2017, 13.41% in Q3, 19.27% in Q2, and 17.78% in Q1. Quarter-on-quarter, house prices increased 3.47% in Q1 2018. The boom continues despite stamp duties being raised for all non-first time homebuyers (November 2016) and allowable loans on residential and commercial properties being cut in May 2017.

Egypt’s house prices rose a surprising 11.45% during the year to Q1 2018, in sharp contrast with a y-o-y decline of 16.68% in Q1 2017. Nominal house price rises were even higher, at 26.29%. But this is mainly due to the extraordinarily high inflation caused by floating the currency in November 2016. During the last quarter, real house prices soared 16.34% q-o-q.

Source: Various series, data descriptions and sources here

 

THE REGIONS:

Europe remains vibrant

European house price rises continue unabated. House prices have risen in no less than 15 of the 21 European housing markets for which figures were available during the year to Q1 2018.

Ireland has been the best performer in Europe, buoyed by its very strong economy. Residential property prices were up by 12.51% during the year to Q1 2018, after y-o-y rises of 11.7% in Q4 2017, 11.75% in Q3, 11.8% in Q2, and 9% in Q1. During the latest quarter, Irish house prices increased 1.38% (Q1 2018). Ireland's surging house prices are mainly driven by strong demand as well as supply shortages. The Irish economy grew by around 7.3% last year and is projected to expand by another 5.7% this year.

Iceland's house prices are soaring, amidst continued increases in demand fuelled by booming tourism. Nationwide house prices rose by 10.14% during the year to Q1 2018, after y-o-y growth of 15.98% during the same period last year. Quarter-on-quarter, house prices increased 2% in Q1 2018.

In 2017, foreign visitor arrivals rose by 24.2% to about 2.2 million, according to Icelandic Tourism Board. Then, during the first four months of 2018, foreign visitors rose again by 3.7% from the same period last year. The economy is expected to expand by 2.9% this year, after growth of 3.8% in 2017, 7.2% in 2016 and 4.1% in 2015.

The Netherlands' housing market remains strong, mainly due to robust demand, coupled with lack of adequate housing supply in the market. The average purchase price of all dwellings rose by 6.92% during the year to Q1 2018, at par with the previous year’s 7.11% growth. On a quarterly basis, house prices were up 3.97% during the latest quarter.

During 2017, home sales surged 13% from a year ago, fuelled by low interest rates and robust economic growth. In Q1 2018, home sales dropped 6.8% from a year earlier but this is still the second highest sales ever recorded by the Statistics Netherlands. The Dutch economy grew by 3.2% in 2017, the highest growth since 2007. GDP is expected to grow by another 3% this year and by 2.6% in 2019, according to the European Commission.

Other strong European housing markets included Jersey, with house prices rising by 8.91% during the year to Q1 2018, Macedonia (6.1%), Riga, Latvia (5.72%), Romania (4.71%), Portugal (4.7%), Germany (4.19%), and Estonia (3.72%). All recorded positive quarterly growth during the latest quarter. In terms of momentum, only Macedonia, Latvia, Portugal and Jersey had stronger performances in Q1 2018 compared to a year earlier.

Modest to very minimal annual house price rises during the year to Q1 2018 were registered in Sweden (2.97%), Slovak Republic (2.41%), Spain (2.37%), Vienna, Austria (1.68%), Finland (0.29%), and Lithuania (0.1%). Only Slovak Republic, Spain, and Austria saw quarterly growth during the latest quarter. On the other hand, only Spain, Austria and Finland performed better in Q1 2018 compared to the previous year.

The U.K.’s house prices were unchanged during the year to Q1 2018. London was the worst-performing region, with house prices falling by 3.4% y-o-y in Q1 2018. Some high-end London districts have experienced significant price-falls.

Europe's weakest housing markets

Ukraine's housing market remains depressed, despite improved economic conditions. Secondary market apartment prices in Kiev fell by 7.55% (inflation-adjusted) during the year to Q1 2018, to an average price of US$ 1,081 per square metre (sq. m.) – worse than the previous year’s 5.05% decline. House prices fell by 1.97% quarter-on-quarter in Q1 2018. House prices in Ukraine have been falling in the past five years, particularly in 2014 (with prices plunging 37.38%) because of hryvnia devaluation due to the Russian war. Ukraine's economy is expected to expand by 3.2% this year, after expansions of 2.5% in 2017 and 2.4% in 2016, and contractions of 9.8% in 2015, 6.6% in 2014 and 0.03% in 2013.

After almost eight years of uninterrupted growth, Norway’s housing market is cooling sharply, partly due to the implementation of stricter mortgage rules last year. The nationwide house price index dropped 3.01% during the year to Q1 2018, in sharp contrast with the strong growth of 7.38% in the same period last year. Quarter-on-quarter, prices increased 1.24% during the latest quarter.

The downturn is being felt most sharply in Oslo, where house prices fell 6.8% during the year to Q1 2018, a striking contrast with the rise of 18% during the same period last year. The economy is expected to expand by 1.9% this year, from an annual average growth rate of 1.4% in the past eight years.

Switzerland. During the latest quarter, prices fell by 1.11% q-o-q. After about 15 years of uninterrupted house price rises, the Swiss government’s efforts to cool the country’s overheated property market have finally succeeded.  House prices fell 2.68% y-o-y in Q1 2018, in contrast to annual rises of 0.59% in Q1 2017, 2.06% in Q1 2016, and 2.52% in Q1 2015. The Swiss economy is expected to expand by 2.3% this year and by another 2% in 2019, following annual growths of 1.1% in 2017, 1.4% in 2016, 1.2% in 2015 and 2.5% in 2014, according to the IMF.

Russia's housing market is now improving, but house prices continue to fall. The nationwide residential property prices 1.95% during the year to Q1 2018, the smallest y-o-y decline since Q1 2013. Moscow’s prices fell by 8.18% y-o-y in Q1 2018 while they dropped 2.75% in St. Petersburg.

During the latest quarter, nationwide house prices actually increased slightly by 0.65%. Similarly, the wider Russian economy is improving significantly, with GDP growing by 1.3% y-o-y in Q1 2018, its sixth consecutive quarter of growth. Inflation has also stabilized. In April 2018, inflation was 2.4%, well below the central bank’s target of 4%. The Russian economy is projected to grow by between 1.5% and 2% this year, from an expansion of 1.5% in 2017 and contractions of 0.2% in 2016 and 2.8% in 2015.

The Asia-Pacific region is gaining momentum

Two of the five strongest housing markets in our global survey are in Asia-Pacific -Macau and Hong Kong - with house prices rising in 8 of the 11 housing markets for which figures were available during the year to Q1 2018.

Macau’s housing market remains super-vibrant, amidst massive infrastructure investments, which will transform Macau's connections to China and Hong Kong. The average transaction price of residential units rose by 20.58% during the year to Q1 2018, following y-o-y rises of 9.24% in Q4 2017, 10.7% in Q3, 31.52% in Q2 and 23.36% in Q1. House prices increased strongly by 5.22% q-o-q during the latest quarter. Macau’s housing market is buoyed by. The economy grew by a spectacular 9.3% in 2017, a sharp turnaround from y-o-y declines of 0.9% in 2016, 21.6% in 2015, and 1.2% in 2014. Macau’s economy is expected to grow by 7% this year and by another 6.1% in 2019, according to the IMF.

Hong Kong's housing market continues to boom, with residential property prices surging 11.79% during the year to Q1 2018, from y-o-y rises of 12.78% in Q4 2017, 13.41% in Q3, 19.27% in Q2, and 17.78% in Q1. Quarter-on-quarter, house prices increased 3.47% in Q1 2018.

Hong Kong's latest house price rises come despite the government raising stamp duties for all non-first time homebuyers starting November 2016 and cutting allowable loans on residential and commercial properties in May 2017.

In Q1 2018, the total number of property transactions in Hong Kong increased 13.6% from a year earlier while sales values surged 22.1%, according to the Ratings and Valuation Department (RVD). The economy expanded by 3.5% last year, the highest growth since 2011. The IMF recently raised its 2018 growth forecast for Hong Kong to 3.6%, up from its earlier estimate of 2.6%.

Thailand’s housing market is growing strongly again, with nationwide house prices rising by 6.1% during the year to Q1 2018, in contrast to a y-o-y decline of 1.37% in the previous year and the biggest rise since Q1 2015. House prices increased 2.95% q-o-q in Q1 2018.

During the first two months of 2018, nationwide land and building transactions rose by 21.9% y-o-y to THB 150.53 billion (US$ 4.66 billion). The Bank of Thailand recently raised its 2018 economic growth forecast to 4.1% from its earlier projection of 3.9% due to rising exports and strong private consumption.

The Philippines is now in its seventh year of house price boom, amidst strong economic growth. The average price of 3-bedroom condominium units in Makati CBD rose by 5.19% during the year to Q1 2018, from y-o-y rises of 6.95% in Q4 2017, 6.58% in Q3, 8.45% in Q2, and 7.04% in Q1. Housing prices increased 0.67% during the latest quarter. The Philippine economy is expected to expand by 6.7% this year, at par with the average annual growth rate of 6.6% from 2012 to 2017.

Asian housing markets with more modest growth included Tokyo, Japan with house prices rising by 4.59% during the year to Q1 2018, Singapore (4.4%), South Korea (0.58%), and Taiwan (0.25%). All, except South Korea, recorded positive quarterly growth during the latest quarter. In addition, all, except Taiwan, showed stronger upward momentum in Q1 2018 as compared to the previous year.

Sharp housing slowdown in some Asia-Pacific nations

China’s housing market is now struggling, as new regulatory and monetary tightening policies are impacting developers and speculative buyers. In Shanghai, the price index of second-hand houses fell by 2.14% during the year to Q1 2018, in sharp contrast with a y-o-y rise of 13.16 in Q1 2017. During the latest quarter, house prices in Shanghai fell by 1.16%. Despite this, the Chinese economy grew by 6.8% y-o-y in Q1 2018, at par with the previous quarter’s growth. The economy is projected to expand by 6.6% this year, from expansions of 6.9% in 2017 and 6.7% in 2016 and its 27 straight years of above 6% growth.

New Zealand's housing market is slowing sharply, mainly due to new lending restrictions last October, and worsening affordability. Median house prices fell by 3.37% (inflation-adjusted) during the year to Q1 2018, a sharp turnaround from y-o-y growth of 7.26% in the previous year. House prices dropped 4.11% q-o-q during Q1 2018. The economy is expected to expand by 2.9% this year, a slowdown from GDP growth rates of 3% in 2017, 4.2% in both 2015 and 2016 and 3.2% in 2014.

Indonesia’s housing market remains sluggish, despite a booming economy. Residential prices in the country’s 14 largest cities fell slightly by 0.29% during the year to Q1 2018, from y-o-y rise of 0.01% in Q4 2017, and annual declines of 0.47% in Q3, 1.07% in Q2 and 0.98% in Q1. House prices fell by 0.62% q-o- q during the latest quarter. The economy is expected to grow by a robust 5.3% this year and by another 5.5% in 2019, from an average annual growth of 5.5% in 2010 to 2017, according to the IMF.

Middle East's housing markets continue to struggle, but Egypt is an exception

The Middle East is now in the doldrums, with the two weakest housing markets in our global house price survey in the region: Qatar and UAE. This is not surprising given the region's ailing economy due to low oil prices and the ongoing political and diplomatic crisis. The Middle East's economy grew by just 1.1% in 2017, the lowest level in eight years.

Qatar is now the weakest housing market in our global survey, amidst a sharp economic slowdown and the adverse impact of the diplomatic crisis. The nationwide real estate price index dropped 9.66% during the year to Q1 2018, from y-o-y declines of 10.44% in Q4 2017, 3.51% in Q3, 4.52% in Q2, and 10.44% in Q1. Property prices fell by 0.37% q-o-q during the latest quarter. The Qatari economy is expected to grow by a modest 2.6% this year, from annual average growth of 2.1% in 2016-17, 4.2% during 2012-15, and 15.7% in 2008-11.

Other Middle Eastern housing markets are also depressed. In Dubai, residential property prices fell 6.44% during the year to Q1 2018, worse than last year’s 3.97% decline, amidst weak economic growth, low investor sentiment, and an oversupply of housing. During the latest quarter, house prices in Dubai dropped 3.03% 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 rose by a meagre by 0.45% during the year to Q1 2018, a sharp slowdown from the previous year's 5.11% growth. Israeli house prices dropped 1.86% q-o-q in Q1 2018.

Egypt is an exception

Egypt’s very strong performance comes as a surprise after being the weakest housing market in our global survey the previous quarter. The nationwide real estate index surged 11.45% during the year to Q1 2018, in sharp contrast with y-o-y declines of 11.49% in Q4 2017, 8.68% in Q3, 5.32% in Q2 and 16.68% in Q1. House prices soared 16.34% 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. He also allowed the government, the biggest landowner in Egypt, to use its land for public-private partnership schemes. The economy is expected to grow strongly by 5.2% this year, the fastest pace in a decade, according to the IMF.

The Americas are mixed

The U.S. remains strong but Canada is slowing sharply. In Latin America, Mexico is strengthening while Chile has rebounded strongly. Brazil, on the other hand, is showing signs of improvement, but house prices are still falling.

After five years of strong house price growth, the U.S. housing market remains surprisingly vibrant. The Federal Housing Finance Agency's seasonally-adjusted purchase-only U.S. house price index increased 4.58% y-o-y in Q1 2018 (inflation-adjusted), up from the previous year’s 3.81% growth. The FHFA index rose by 0.8% q-o-q during the latest quarter.

Demand and construction activity continue to rise. In April 2018, sales of new single-family houses rose by 11.6% while existing home sales were down by 1.4%. Building permits authorized for new housing units rose by 7.7% in April 2018 from a year earlier. Likewise, new housing starts rose by 10.5% y-o-y in April 2018, while completions were up 14.8%. Recently, the IMF raised its 2018 growth forecast for the world’s largest economy from 2.3% to 2.7% and finally to 2.9%, an acceleration from the expansions of 2.3% in 2017 and 1.5% in 2016. This was after President Donald Trump signed a landmark tax law (known as the Tax Cuts and Jobs Act or TCJA) considered to be the largest overhaul of the U.S. tax code in over 30 years.

House prices in Canada's eleven major cities rose by 4.2% during the year to Q1 2018, a sharp deceleration from last year’s 11.47% growth. Quarter-on-quarter, house prices actually fell by 1.41% q-o-q in Q1 2018. Demand is falling. In April 2018, actual sales activity dropped 13.9% from a year earlier.

The Canadian Real Estate Association (CREA) expects home sales to fall by 7.1% this year, amidst the introduction of another set of market-cooling measures, against a backdrop of rising mortgage interest rates. The Canadian economy grew by a healthy 3% in 2017, the highest growth since 2011. The economy is expected to expand by 2.1% this year and by another 2% in 2019.

Latin American markets for which we have statistics  are improving

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 5.33% during the year to Q1 2018, in contrast with the previous year's 0.37% y-o-y decline. On a quarterly basis, house prices rose by 3.37% in Q1 2018.

Mexico's housing market shows signs of improvement, with the nationwide house price index rising by 3.25% during the year to Q1 2018, up from a y-o-y growth of just 0.17% in Q1 2017. On a quarterly basis, house prices increased 0.2% during the latest quarter.

Brazil is gradually emerging from its property downturn, fuelled increasing construction and home sales, as well as a positive economic outlook. In Sao Paulo, house prices fell by 1.11% during the year to Q1 2018, an improvement from y-o-y decline of 3.75% in a year earlier and the lowest annual fall in three years. Quarter-on-quarter, house prices in Sao Paulo fell by 0.19% in Q1 2018.