House prices in mainstream residential markets around the world have risen on average by just 1% in the last 12 months and this stagnation is likely continue well into 2013, according to the latest global house price index from Knight Frank.
The index rose by 0.1% in the three months to the end of September although buyer confidence is at an all time low in Europe with Greece knocking Ireland off the bottom spot. In contrast six markets, Brazil, Hong Kong, Turkey, Russia, Columbia and Austria saw double digit price growth. This means that overall, mainstream global property prices stand just 5.2% above the lows hit in the wake of the financial crisis in the second quarter of 2009.
‘Europe was the only world region to see prices decline in the last year and, given news that the Eurozone is now in its second recession in three years, it’s no surprise to see the bottom 12 rankings all occupied by European countries this quarter,’ said Kate Everett-Allen, of Knight Frank’s international residential research team.
The Eurozone’s 17 member states have on average seen prices fall by 1.8% in the 12 months to September, Greece is bottom of the pile with an 11.7% decline in prices in the year to September, taking up a position Ireland has held for five consecutive quarters. Ireland, by comparison, has seen its rate of decline improve, up from -14.3% a year ago to -9.6%.
Price growth in Asia Pacific is also slowing, with 4.2% annual growth in the year to September, compared to 7.6% in the previous 12 months. ‘Looking east, Asia’s policymakers are offering little hope of an Asian driven recovery. China’s new leadership looks set to continue with stringent property cooling measures and new lending restrictions in Hong Kong are likely to limit the availability of credit,’ explained Everett-Allen.
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South America has seen much more positive growth of 9.8% with Brazil recording the highest annual increase in prices, up 15.2%, but even in Brazil the pace of growth is slowing. House prices in the United States are now 3.6% higher than in the third quarter of 2011, vacancy rates are at their lowest level since 2005 and housing starts are up 49% year on year, the report points out. However, the US fiscal cliff, the crunch point when tax benefits are due to end and spending cuts commence at the end of 2012, could extinguish this hope.
‘In summary, confidence, affordability and debt are constraining Europe. Strict lending and the looming fiscal cliff may dent the early signs of growth in the US while regulatory measures in Asia are keeping housing markets in check. The current period of stagnation looks set to continue well into 2013,’ concluded Everett-Allen.