International housing markets recovering unevenly

  • 15 years ago
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25/11/2009-International housing markets in the world’s leading economies continue to recover, however many housing markets in leading economies remain distressed. Of the 27 countries which have already published their Q3 data, more countries have experienced house price falls (17 countries) during the year to date, than have enjoyed price rises (10). In addition, the house price falls in several countries have been much larger than house price rises anywhere, and include unprecedentedly severe falls in Latvia (-59.7% year to date), the UAE (-48.1%), Bulgaria (-28.7%), Iceland (-21.2%), Russia (-19.5%) and Slovakia (-15.3%) (all figures inflation-adjusted).
However the annual data is somewhat like a car’s rearview mirror. During the latest quarter, price rises have occurred in 16 countries, and falls in only 11, of the 27 countries (both major US indices were nominally positive, but adjusting for inflation puts the FHFA index still in negative territory). Quarter-on-quarter house price changes in the UK, Canada, Germany, Singapore, and South Africa are back in positive territory, after these countries suffered during the global financial crisis.
So the trend is toward recovery. More broadly, the world seems polarized between the Asian economies, which are enjoying strong economic growth and high residential property price rises (Thailand excepted), and Eastern Europe and the UAE, where growth has stalled and property markets have crashed. Even there, figures for the latest quarter offer hope.
The Global Property Guide’s statistical presentation uses price-changes after inflation, giving a more realistic picture than the (more upbeat) nominal figures usually preferred by real estate agents. The fact that housing markets are recovering in inflation-adjusted terms is significant, as the dramatic declines of housing busts are typically followed by a period in which house prices are static in nominal terms, but decline in real (inflation-adjusted) terms.
Israel’s housing market has been the best performer for two quarters in a row. House prices rose 10.2% over the year to end-Q3 2009, an acceleration from 8.4% increase over the year to end-Q2 2009.
The Asia-Pacific region’s housing markets have revived.  
Australia’s housing markets were up 4.9% year-on-year to end-Q3 2009. Darwin had the highest price increase among Australia’s eight capital cities, followed by Melbourne and Canberra. The upsurge appears to have been partly fuelled by a genuine housing supply shortage. Key interest rates in Australia are now on the rise.
New Zealand experienced a more modest increase of 2.0% over the year to end-Q3 2009. Median sales prices in New Zealand are now back at mid- 2008 levels.
Hong Kong’s housing market is causing concern about over-ebullience. House prices rose by 3.1% over the year to end-Q3 3009, a significant improvement from the 7% decline year-on-year to Q2 2009. During the three months to September, house prices jumped 11.1%.
In Singapore overheating is a concern too. House prices jumped by an all-time record quarterly 14.3% increase (though house prices in Singapore are still down 11.0% over the year). Singapore’s economy has expanded 0.5% during the year to end-Q3 2009. Its construction and manufacturing sectors are the primary source of growth, having expanded 12.8% and 6.6% (y-o-y), respectively. 
 The UK, Canada, Germany, and South Africa have seen increases during Q3 2009, after suffering declines every quarter since 2008.
In the US, Q3 house price changes were nominally up 3.1% according to the Case-Schiller index, or up 1.2% after inflation. In nominal terms, the Case-Schiller recorded a 8.9% decline in the year to end-Q3 2009, a marked improvement over the 14.7% decline in the year to end-Q2 2009, and the 19.0% drop in year to end-Q1 2009. House prices were down a lower 2.2% (inflation-adjusted) during the year to end-Q3 according to the FHFA, and down 3.7% in nominal terms.
In the UK, house prices were up 3.4% in Q3 according to Nationwide, and 2.1% according to the Land Registry. UK house prices have been rallying since May. Canada, Germany and South Africa had modest increases of less than one percent during Q3 2009.
Investors in Dubai, UAE have something to be optimistic about. Dubai’s nominal house price index increased 7.0% during Q3 2009, a significant improvement from an 8.0% drop during Q2 2009. (No inflation-adjusted figures are available for Dubai). 
This is the first q-o-q increase since the financial crisis hit the emirate in late 2008. However, over the year to end-Q3 2009, Dubai’s nominal house prices are still down by 47.0%.
 Source: Global Property Guide

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