Emerging markets top global house price league over the past decade

India leads increase in house prices over the last decade

India has seen the biggest rise in house prices since 2001 while the eurozone is in the 10 worst performing property markets, according to new research.

Emerging markets saw the biggest increases in house prices over the past decade, according to the Lloyds TSB International Global Housing Market Review but the UK was still among the 15 top performing housing markets.

Emerging economies accounted for four of the six top performing housing markets since 2001, including the three countries with the biggest rises.

Overall, Indian house prices have risen by the most since 2001, having increased by 284% in real terms, that is allowing for consumer price inflation, since 2001. This is equivalent to an average annual rise of 14% and is almost six times the 50% rise in real UK house prices over the same period and over 10 times the 23% rise seen in the euro area.

After India, Russia recorded the next biggest increase at 209%, followed by South Africa at 161%. Overall, house prices across the 32 countries tracked have risen by an average of 56% in real terms over the past decade.

House prices have typically risen fastest in those countries with the fastest growing economies. The substantial rise in Indian house prices over the past decade is partly a reflection of the 280% rise in Indian GDP over the same period. Overall, GDP has increased, on average, by 155% in the ten countries with the biggest rises in house prices since 2001. This is almost four times the average 43% rise in GDP in the ten countries with the worst house price performance.

However, the largest economies are among the biggest fallers. Since 2001, half of the six countries that recorded a fall in house prices over the past decade, Japan, Germany and United States, are members of the G8, the world’s eight largest economies. Japan recorded the biggest fall in house prices, down 30%, followed by Ireland down 23% and Germany down 17%.

The 50% rise in real UK house prices over the past decade was the thirteenth highest increase among the 32 countries covered in the report. Six countries, India, Russia, South Africa, Lithuania, Hong Kong and Bulgaria, recorded price increases over the past decade that were more than double the rise in the UK.

Real house prices in the euro area have risen by an average of 23% since 2001, less than half the UK growth. Five of the countries saw a better house performance than the eurozone average. France saw the largest increase at 82%, followed by Belgium at 69%, Finland at 61%, Spain at 46% and Italy at 31%.

In the rest of Europe, outside the euro area, there were large gains in Norway with an increase of 72%, Iceland grew 37%, Switzerland was up 30% and Denmark up 25%.

 ‘A house price divide appears to be opening up with the general outperformance of the housing market in emerging economies compared to more developed nations appearing to reflect the stronger economic performance of these countries,’ said Suren Thiru, economist at Lloyds TSB International.

‘Looking forward, the outlook for house prices globally is likely to be determined in part by the pace at which the global economic recovery continues, the events in the eurozone as well as the economic prospects of individual countries,’ added Thiru.

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