Global House Prices 2016: Who, What, Why?
Arthur takes a look at the global house price situation as we head into 2017.
Research by Knight Frank appears to show that global house prices have increased by the highest amount in two years, in the year to September. Forty-four out of the fifty-five countries tracked by the GHPI showed an increase in their house prices, leading to a global average increase of 5.3%. Only five countries reported double digit growth this year, compared to twelve three years ago. However, with 2016 being one of the most turbulent years in recent memory, any increase in global house prices is a good thing.
Select Performers
Out all fifty-five countries Turkey saw the highest annual price increase, coming in at 13.9%, for the fifth quarter in a row. Some may be surprised to learn this as all that is often on the news about Turkey is their war against terrorism. Although many areas of Turkey are safe and secure, investors may begin to cool their interest in the country as problems such as currency volatility begin to set in.
Water-locked New Zealand came in a close second, with a 13.% increase year-over-year. Despite a drop in GDP New Zealand’s economy has improved on last year overall, with improvements in public debt and exports alleviating some pressure.
The United States is now seeing the average house price exceeding pre-financial crash peak in 2006. There had been expectations of a drop leading up to the presidential elections. However this drop never appeared. It is only now with President-elect Trump tapping Ben Carson for Housing Secretary that we are seeing markets begin to worry.
The United Kingdom has seen an increase entirely average of global house prices. Arthur has spoken on the U.K.’s house prices several times before, so it is suffice to say that the increase in prices has been underpinned by a shortage in supply, alongside low mortgage rates.
Finally, we shall look at a low performer. Hong Kong has seen a decrease of 5.5% in house prices year-on-year. Despite this appearing negative, it is in fact a good thing. China and Hong Kong have seen wildly increasing prices of the past few years. This meant that twenty major cities have tightened their control over prices. Between June and September Hong Kong saw an property price increase of over 4%. The city’s governing body responded by increasing Stamp Duty by 15%. Therefore, whilst the statistics suggest Hong Kong is in a state of turmoil, it is in fact a positive thing.
What’s to come?
As we look ahead to 2017, there is really no telling what will happen. The latest numbers have looked promising, but their are far too many unknowns for conclusions and predictions to be made just yet.
