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International House Buyers Experience Global Cooling

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International house buyers experience Global Cooling

29 April 2006

(From: Easier Property News)

Average global house prices stood 6.1% higher at the end of March 2006 compared to the same period 12 months earlier, according to the Knight Frank Global House Price Index.

Global house price growth has slowed sharply from the recent peak reached in 2004 – when prices were growing by 10.9% per annum.

The annualised growth table is led by Estonia (17.0%), Denmark (16.1%) and New Zealand (13.5%).

The slowest annualised price growth is experienced in Serbia-Macedonia (-10.3%), Hong Kong (-6.6%) and Japan (-2.6%).

The sharpest reversal of fortune was experienced in Hong Kong moving from 23.0% growth in early 2005 to negative growth in early 2006.

Liam Bailey, Knight Frank’s Head of Residential Research commented: “Today marks the launch of the Knight Frank Global House Price Index. The first serious attempt to analyse pricing trends in residential property across the world on a standardised basis every quarter. Results for 29 countries are released today and are based on an assessment of price changes in the mainstream housing markets of the countries covered.”

“Those familiar with the UK residential market will be surprised to learn that not every nationality finds house prices a subject for fascination. This unfortunately means there is a resulting lack of data to assess market movements in many countries. Even tracking basic data on house prices within the European Union can be problematic.”

“Where possible we have been able to rely on official national statistics or a well respected national financial institution, usually a large mortgage provider (as in the case of the UK where we have adopted figures provided by Nationwide). In some cases these sources of data are not available and we have had to rely on valuation assessments of market movements – effectively assessing the value of a basket of properties from quarter to quarter. In certain cases we have had to relate our findings to capital cities as a proxy for the wider national market – as in the case of the three Baltic states; Lithuania, Latvia and Estonia.”

The results…

The most notable trend is that house price growth is slowing across the globe. The early boom in house prices was led by the UK and Ireland in the second half of the 1990s with Australia catching up in 2000. As the 2000s progressed, more and more countries saw house prices rise strongly, including the majority of the European Union, South Africa, and latterly the US and New Zealand.”

“Most countries in the EU, especially the new accession countries to the east, have seen rapid price growth in recent years. The growth table is now led by Estonia (17.0%), Denmark (16.1%) and New Zealand (13.5%) with the slowest price growth experienced in Serbia-Macedonia (-10.3%), Hong Kong (-6.6%) and Japan (-2.6%). In terms of a change in fortune the most significant shift occurred in Hong Kong, where annualised growth moved from 23.0% in early 2005 to negative growth in early 2006. Ireland has shown increasing resilience by moving nine places up the house price growth table, to stand at number six in the first quarter of 2006 with annualised growth of 10.7%, compared to only 7.5% a year earlier. The UK is no longer the strong performer it has been in recent years, current annualised growth at 5.3% places the UK exactly in the centre of the table in 14th position out of 28 countries.”

What does it all mean?

“Rapid growth in global house prices relates to two main factors: lower finance costs and increased wealth across the globe following strong economic growth in recent years.”

“Slower house price growth globally suggests that affordability constraints are been hit in many locations. For example in the US higher interest rates and the related higher cost of mortgage finance have contributed to lower house price inflation.”

“Our forecast is that a general slowing of average global house price growth over the next 12 months will disguise many regional hot-spots and investment opportunities. Whilst prices in the UK and France are respectively 35.4% and 46.2% higher now than they were three years ago – prices in Germany are 2.1% lower over the same period. We believe that stronger than anticipated economic performance will lead to above average performance in Germany from 2007.”

“The process of “levelling up” in eastern Europe will carry on apace over the next five years with average prices in most of these states coming close to the EU average.”

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  • 335 Brexit, House prices and Summer 2020

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      • down 5% +
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