There is no doubt that 2017 has been a dramatic year for housing markets around the world. The UK is under pressure in light of Brexit, the performance of European housing markets is still patchy to say the least and while the US housing market has picked up of late, concerns over Donald Trump’s monetary policies continue. If we look towards the Far East, the Chinese government is still battling to maintain control of a difficult housing market and Australia continues to go from strength to strength despite headlines spreading doom and gloom.
So, what will 2018 hold for worldwide housing markets?
European house prices
While some European members are rubbing their hands with glee in anticipation of increased economic productivity when the UK leaves, house prices have not necessarily reflected these hopes. The Spanish market is showing signs of life but there is still a significant overhang of repossessed properties. The Portuguese housing market is also in a similar situation and economic stress is beginning to show in countries such as Germany and France which have historically been the European powerhouses, aside from the UK.
If you also take in the Greek debacle, with ever greater funding required, investors will need to be selective when looking at European housing markets. Even though much of the focus in light of the Brexit vote has been on future prospects for the UK, how will this impact the European economy and European housing market?
US housing market
Donald Trump entered the White House in a blaze of glory, promising a raft of new policies, a breath of fresh air and a change in US politics. Fast forward to the end of 2017 and very few of his ground breaking policies have been delivered, he continues to battle with overseas partners and many believe his days as president are numbered. However, against this so-called “difficult backdrop” the Federal Reserve has begun a series of US base rate increases in order to control over exuberance as a consequence of cheap finance.
There are high hopes for US house prices in 2018 in light of recent tax cuts and a strengthening economy. As ever the current state of the US economy is reflected in stock markets which are within touching distance of previous all-time highs reached early this year.
Australian housing market
The Australian housing market has been under the spotlight for some time now with the overall market going from strength to strength. There have been some fluctuations in some of Australia’s more populated cities, varied performance in some of the suburbs but on the whole domestic investors, as opposed overseas investors, continue to buy into the Australian economic story.
Over the last 12 months we have seen various investigations into the impact of overseas investment in the Australian housing market. Amid suggestions that overseas investors were pushing house prices above and beyond the reach of first-time buyers, there is no evidence to prove this. However, a number of restrictions on overseas investment have been introduced to the Australian housing market although it is difficult to justify many of these.
Chinese housing market
There is no doubt 2017 has been a difficult time for the Chinese authorities who seem to have lost some of their control over Chinese investors. We have seen some major volatility in Chinese house prices, Chinese investors switching their funds overseas and the government looking to add restrictions on new builds and overseas investment. In November, Chinese new home price growth cooled as a consequence of government policy and it will be interesting to see how 2018 pans out.
The Hong Kong property market on the other hand now boasts some of the most expensive houses in the world with little likelihood of any let-up in the short term. The problem is that the Hong Kong government controls the vast majority of land for development, with limited sales each year. This has pushed land prices higher and higher which has a major impact upon construction costs with these ever increasing expenses passed onto the consumer. The consequence, ever rising Hong Kong house prices!
There is no doubt that 2017 has brought some varied performances across the worldwide housing market. We have seen continued troubles in Greece, ever rising prices in Hong Kong, a continuation of the Australian property market boom while the Chinese government struggles to maintain control. The European and UK housing markets have certainly grabbed the headlines as Brexit negotiations continue at a snail’s pace. How will Brexit impact Europe and the UK? The next 12 months should give us a clearer indication.