There is no doubt that the last 12 months have been among the worst in the history of the worldwide property market and there may well be more bad news to follow. We have seen banking systems around the world collapse, we have seen property investors repatriate their funds and we have seen governments desperately attempting to refloat economies and increase business liquidity levels which have literally fallen off a cliff. But do you really know the variations in house price performance over the last year? Do you know the winners and the losers?
The following information gives you a snapshot of house price changes (adjusted for inflation) in many far-flung areas of the world. Information is calculated on a 12 month basis from the third quarter of 2007 to the third quarter of 2008 along with perhaps an indication of future trends with a breakdown in performance between the second quarter of 2008 and the third quarter of 2008.
Despite the doom and gloom in the Far East many people may be surprised to see that China, and in particular Shanghai, has been the best performing house price market in the 12 months from the third quarter of 2007 to the third quarter of 2008. Prices rose on average by 17.98% although perhaps more telling is the slowing 0.11% rise between the second quarter of 2008 and the third quarter.
It has been well documented that the Chinese government has been pouring substantial amounts of money into the property market to try and shore up a system which is struggling. A dramatic decline in the rate of growth in the third quarter of 2008 would appear to indicate a move into negative territory when the fourth quarter figures are released.
Hong Kong has performed in a similar manner to China with house prices up 16.82% in the 12 month period under review although a 1.81% fall between the second quarter of 2008 and the third quarter seems to indicate a significant turnaround in the market. While many had predicted the Far East markets would struggle, it would appear that they have remained firmer than many others and perhaps offer potential for a significant turnaround as and when the recovery comes.
As with the Chinese property market, Hong Kong authorities have been quick to come to the rescue of a failing economy and while the signs are that a reduction in economic growth is on the cards, many believe the authorities have acted swiftly enough to avert the worst of a difficult situation.
The Switzerland housing market is probably not one which appears on the radar of many international property investors but a 2.23% growth in house prices during the 12 months to the third quarter of 2008 was acceptable. However, when you consider the 1.93% growth in house prices during the period between the second quarter and third-quarter 2008 we start to get an impression of a fairly level market which has yet to be significantly affected by the worldwide economic downturn.
Whether this performance continues into 2009 very much remains to be seen but there are certain characteristics about the Swiss housing market which should offer some degree of comfort to investors.
Singapore is a country which has attracted the attention of many expats over the last few years with a growing number of foreigners choosing to spend their last few years in the country. This has created something of a housing boom although an increase of just 2.21% in house prices in the 12 months to the third quarter of 2008 does not bode well the future. When you also consider that house prices fell by 2.94% between second quarter and third-quarter 2008 it looks as though the concerns of many property experts could yet materialise.
Singapore is a country which has benefited immensely from the interest in international property, international business and tourism. The sudden demise of tourist spending and property investment spending has hit the country hard and while the framework is still there for a successful future, the short-term situation is a little more mixed.
United Kingdom (figures provided by Nationwide)
It will come as no surprise to see the UK near the bottom of the house price performance league based upon the 12 months to the third quarter of 2008. During this period house prices fell by an inflation adjusted 14.44% and more alarmingly the rate of decline increased between the second quarter and third-quarter with a 6.67% fall. The banking system in the UK has literally ground to a halt again and despite billions upon billions of taxpayer’s money being ploughed into the system there is little in the way of investment funding liquidity.
While there has been some interest in housing property on the way down, it would appear that many buyers have yet again gone on strike and there is currently little or no activity in the marketplace at the moment. Many people believe the UK property market could fall significantly further in 2009 and take a number of years to recover.
Ireland was put forward by many as the great success of the EU although recently there have been a number of banking scandals, nationalisation of a prominent bank and a collapse in the property market. Suddenly the Irish market has gone from a prominent, attractive and potentially lucrative international property market to one which has become friendless overnight. The worsening banking situation has also caused serious concern amongst both domestic and international investors and many expect the government to call for assistance from the EU or even the International Monetary Fund.
In the current climate it is difficult to see where the recovery will come from in the Irish property market or when the economy will start to level off.
Israel has been in the news of late after the conflict against Hamas forces in the Gaza Strip. The country itself has enjoyed something of a rocky ride over the last few years and the property market appears to be suffering. During the 12 month period in question house prices fell by an average of 5.37% although the third quarter of 2008 saw a 3.66% fall, indicating an escalation of the problems in the property market.
While there is a cease-fire in place in place at the moment, regarding the Gaza conflict, the situation has been ongoing for some time and would appear to be far from over. The country continues to attracted differing view of opinions from the both the Western world and the Middle East world, something that could see many investors holding off for the foreseeable future. This potential powder-keg could literally blow up at any moment and many investors are looking to stay clear in the short to medium term.
The above figures offer a snapshot of house price performances, inflation-adjusted, across a variety of countries in the world. While there are some exceptions to the rule, it appears as though the rate of slowdown is increasing in the vast majority of countries and 2009 could well be a very difficult year for many of those in question.