World house prices up by an average of 4.3% in 2012
House prices around the world rose by an average of 4.3% in 2012 but the main European markets remain challenging, according to Knight Frank’s lasted Global House Price Index.
Hong Kong recorded the largest rise with mainstream residential prices increasing by 23.6% in 2012 while Greece recorded the largest fall in mainstream prices for the second quarter in a row with prices falling on average by 13.2%.
Analysis by world region shows house prices in South America experienced the strongest growth in 2012, an increase of 8.4% on average while prices in Asia Pacific rose faster in 2012 than in 2011, increasing by 6.7% on average compared to 2.8% a year earlier.
According to Kate Everett-Allen, head of International Residential Research, the 2012 results suggest the rehabilitation of the world’s housing markets following the global financial crisis is still a work in progress.
‘The overall picture is an improving one, albeit marginally so. Of the 55 housing markets we track 20 saw prices fall in 2012, down from 25 in 2011. What is more telling perhaps is the fact that 19 of the 20 countries which experienced price falls in 2012 were located in Europe,’ she said.
‘Hong Kong leads the pack and with supply lagging, demand from mainland Chinese investors keen to get their slice of Hong Kong’s real estate, prices, have surged. However, if the Hong Kong government’s latest efforts to increase stamp duty is a measure of their determination to cool price growth we can expect a return to more muted growth in 2013,’ she explained.
Properties worth below HK$2 million now incur a stamp duty of 1.5%, while the rate for properties worth above HK$2 million has been doubled, to up to 8.5% of the property’s value.
Dubai, in second place in 2012’s rankings, experienced price growth of 19% in 2012. Everett-Allen explained that after several years of falling prices the Dubai market is finding its feet. Stalled developments are being resurrected, sales volumes are rising and the level of market transparency is improving.
The United States offers a chink of light as well. In 2012 US property prices grew by 7.3%, the largest annual rise since 2006. In 2012, 19 of the 20 US cities in the S&P/CaseShiller Index posted annual price gains but the report points out that tight lending still has the capacity to curb the speed and strength of the recovery in 2013.
Turning to Europe, Turkey, Russia and Austria bucked the region’s wider trend of negative price growth, recording growth of 10.5%, 10.2% and 10.1% respectively in 2012.
However, Greece, Spain and perhaps more surprisingly the Netherlands languished in the bottom five rankings for the second consecutive quarter. Ireland, a long term resident at the foot of the table looks to have broken free, recording a fall of 4.5% in 2012, compared to a 16.7% decline a year earlier.
The report predicts that 2013 looks unlikely to deviate significantly from 2012’s script. ‘The performance of the world’s mainstream housing markets will depend on finding some economic stimulus, relaxing lending criteria and instilling buyer confidence. Europe presents the main downside risk acting as a brake on global growth,’ said Everett-Allen.