Global house prices sees highest growth rate in 3 years

PETALING JAYA (June 20): Average house prices rose by 6.5% across 55 countries tracked by global real estate firm Knight Frank in its global house price index (HPI) for the first quarter of this year (1Q2017). This is the highest annual growth rate recorded so far since 1Q2014.

According to the index, 11 countries recorded double-digit price growth in the year to March 2017, while a year ago, only four countries fell into the double-digit price growth bracket.

Iceland tops the rankings for the second consecutive quarter, recording an average price growth of 17.8% in the year to March 2017, fuelled by a lack of supply.

Price growth in China has slipped marginally to 10.3% per annum as more than 45 Chinese cities have implemented housing purchase restrictions.

“Three of the top 10 strongest growing markets globally were in Asia Pacific at the end of 1Q2017. Hong Kong, in second place, continues to see price growth despite the newly introduced lending restrictions, while New Zealand in third place has also seen the central bank act to curb excessive lending.

“China, in 10th position, is also seeing policymakers step in to cool many of the major city markets — although the headline national figure is somewhat tempered by weaker growth in some of the smaller Tier-3 and Tier-4 cities,” said Knight Frank head of research for Asia Pacific Nicholas Holt.

In Europe, France and the Netherlands had seen an increase in housing price growth ahead of their 2017 elections while the UK and Germany saw slower price growth.

Europe’s top performers are Malta (12.6%), Czech Republic (11%), Estonia (10.7%) and Hungary (10.5%).

Meanwhile, a brief look at some of the key elections in 2017 shows France and the Netherlands standing out as two key countries where price growth strengthened ahead of their polls, said Knight Frank international residential research partner Kate Everett-Allen. However, UK’s data showed property prices had eased with annual growth reaching 4.1% in the year to March, down from 5.3% a year earlier.

Closer to home, Knight Frank said growth continues to moderate with the Malaysian HPI increasing by “only 5.5%” in 4Q2016 (preliminary) relative to 4Q2015, its slowest pace since 2010, hinting that the sluggish property market may be bottoming out.

“On a quarterly basis, the Malaysia HPI posted its first decline of 0.7% since the global financial crisis in 2008 (3Q2008-4Q2008: -1.9%).

“The slowdown in the property market may be bottoming out as sentiment improves, supported by the recent rebound in the country’s economic growth with 5.6% expansion in 1Q2017 (4Q2016: 4.5%) and strengthening of the local currency among other factors,” said Knight Frank research and consultancy executive director Judy Ong.