International Property Price Overview

International Property Price OverviewIt’s easy to watch property prices and economic fortunes rise and fall on a nation by nation basis, but globally speaking what if anything is the interrelationship between property markets around the world, and how could a rising market in one country affect a slowing real estate sector in another economy?

The Knight Frank Global House Price Index regularly updates the growth figures and positive or negative development aspects on a nation by nation basis and allows one to compare and contrast the health of property markets around the world.  The latest findings from Knight Frank as a company, and the latest conclusions one can draw from their updated Index is that the world is not heading for global property market meltdown as many doomsayers predicted…we take a closer look.

Overall the property markets around the globe are healthy with one or two exceptions.  In market clusters such as in Eastern Europe and more specifically within the two groups of Eastern European property market, namely those in countries within the EU and those in countries aligning for future EU acceptance, one can see trends that flow across the markets. 

Taking a wider approach to the overview of global property markets, recently many experts were predicting a global house price crash as rising oil prices, interest rates and costs of living were making the gap between affordability and house prices unrealistic and unachievable.  It seems now however that as finance remains affordable and fairly strong economic growth has been recorded in many nations, a slowdown of property prices to prevent the affordability gap widening has been the worst consequence for the majority of real estate markets worldwide.

In countries such as Australia, America and Great Britain where prices boomed pre-2003 and where it was initially predicted that housing markets would crash causing a global knock on effect there has been a very clear slow down in price growth and in certain areas there have been negative corrections - but most people now accept that a crash is not pending because cheap mortgage finance and strong nationwide economic growth is supporting a healthy housing market.

The most dramatic global movements in property market activity were seen in Latvia and in Serbia.  In Latvia annualised growth in property prices rose by an incredible 45.3% whereas in Serbia they crashed to -5.1%.  In between most markets faired moderately with exceptions in Eastern Europe and Asia.

In Eastern European countries already within the European Union property prices have been levelling up (and up in the case of Latvia!); those such as Bulgaria which are poised on the brink of membership are also benefiting from playing catch up but are also enjoying increased speculative attention from investors.

In certain Asian markets where controls relating to ownership of real estate have been tightened and FDI has ebbed away annualised growth has receded which can be seen most dramatically in the case of Hong Kong which went from positive 22.5% growth last year to -2.4% this year.

To examine property prices on a global scale is interesting, to watch the trends in market clusters is more interesting and then to break it down on a country by country basis can bring up areas or countries suddenly worth looking at or avoiding for property investors.

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