Global house prices converge as steady growth becomes ‘the new norm’

Knight Frank's Global House Price Index up by 4% in the year to June 2016

Low interest rates and degrees of political turbulence mean that property markets in the US and the UK seem to have been twinned in the last 12 months, data from Knight Frank suggests, with prices rising by 5.1% and 5.2% respectively in the year to June. It’s part of a wider global trend, with “outlying” statistics seeming to evaporate to leave relatively steady price growth as “the new norm”…

The overall +4% global index reading indicates a pretty consistent narrative, sitting on that trend for the last couple of years. “Yet closer inspection shows the extremes are moderating,” suggests Knight Frank’s Kate Everett-Allen. “The percentage points separating the strongest and weakest performing housing market have narrowed from 33 points in Q3 2015 to 23 this quarter.”

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Turkey tops this quarter’s table with an annual growth rate of +14% – although this is quite a chunk down on a previous reading of +19%, and it’s worth flagging that “real” price growth (where the country’s 7% general inflation rate is stripped out), puts Turkey down in 13th place; New Zealand comes out on top in this instance.

Of the top five performing countries this quarter, Turkey and Sweden are the only two markets where price growth has slowed compared with last quarter, down from 19% to 14% and from 13% to 9% respectively.

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China’s annual +5.9% may seem sensible, but the headline stat “hides significant variations at a city level”. Top performing cities – Beijing, Guangzhou, Sanya, Shanghai and Shenzhen – have been through a markedly different year compared to China’s other 657 urban centres (100 of which have a population of more than 10 million). As such, the government is rolling out city-specific measures to either curb or bolster markets.

At the bottom end of the table, key Asian markets of Hong Kong, Taiwan and Singapore occupy three of the tail-end five rankings, with weak economic growth, stringent cooling measures and the strong US dollar continuing to hamper sales.

Over in Brazil, “the latest data suggests the build-up to the Olympic Games was unable to act as a counterbalance to Brazil’s slowing economy and housing market.” Average prices here slipped by 0.7% year-on-year, while Rio saw more dramatic downward movement; prices fell by 3.6%in the year to June.

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