Global Property Guide
Last update: Dec 19 2007
ANNUAL HOUSE PRICE CHANGE (%), IN LOCAL CURRENCY TERMS |
| | 2007* (LATEST) | END-2006 |
| Bulgaria | 30.59 | -- |
| China (Shanghai) | 27.85 | -0.61 |
| Singapore | 27.59 | 10.15 |
| Estonia (Tallinn) | 23.38 | 28.64 |
| Lithuania | 13.64 | 30.95 |
| Philippines | 13.04 | 9.63 |
| Colombia | 12.82 | 6.77 |
| South Africa | 12.52 | 15.12 |
| Norway | 11.56 | 16.67 |
| Hong Kong | 11.25 | 4.11 |
| Australia | 10.63 | 9.71 |
| Latvia | 10.22 | 68.99 |
| Sweden | 9.86 | 10.50 |
| UK | 9.68 | 10.49 |
| South Korea | 9.01 | 11.60 |
| Poland | 8.38 | 9.67 |
| France (Paris) | 8.27 | 9.70 |
| Japan (6 cities) | 7.75 | 4.12 |
| New Zealand | 6.67 | 11.86 |
| Canada | 6.13 | 10.74 |
| Finland | 5.88 | 6.56 |
| Italy | 5.60 | 6.30 |
| Spain | 5.31 | 9.14 |
| Indonesia | 5.24 | 6.60 |
| Greece | 4.18 | 10.54 |
| Denmark | 3.95 | 14.94 |
| Netherlands | 3.77 | 4.73 |
| Malaysia | 3.20 | 4.80 |
| Switzerland | 2.56 | 3.24 |
| Germany | 2.04 | 3.06 |
| Portugal | 0.49 | 0.65 |
| Israel | -0.51 | -3.16 |
| Thailand | -0.78 | 1.87 |
| Japan | -1.48 | -2.78 |
| Ireland (monthly) | -4.68 | 11.8 |
| US (NAR) | -5.07 | -0.18 |
| US (FHFB) | -3.49 | -1.9 |
| US (OFHEO) | 1.79 | 6.03 |
| * latest available
Source: various series, list of house prices, data and sources here |
The US housing market continues to weaken.
US home prices dropped 5% y-o-y to October 2007, to an average of US$207,800, based on sales recorded by the National Association of Realtors (NAR) (or 8.46% in real terms).
The Office of the Federal Housing Enterprise Oversight (OFHEO), which produces an arguably more widely-based index, saw prices rising 1.8% to end Q3 2007 from a year earlier, which translates to a fall of 0.6% when adjusted for inflation. 10 states in the OFHEO index experienced price falls, including Michigan (3.7%), California (3.6%), Nevada (2.4%), Massachusetts (2.3%), Rhode Island (2.2% and Florida (2.1%). Only two states registered house price growth of more than 10% y-o-y to end Q3 2007, Utah (12.9%) and Wyoming (11.8%).
Canada’s housing markets are also showing signs of slowing. The new housing price index rose 6.1% to end-Oct 2007 from a year earlier (3.7% in real terms), lower than the 11.4% (10.3% in real terms) y-o-y price rise to Oct 2006.
Europe
Most European housing markets slowed. Ireland’s house price plunge continued, with a 4.68% y-o-y drop to October 2007. When adjusted for inflation, the drop is more pronounced at 9.1%. The Irish housing market is vulnerable to interest rate changes, as 85% of mortgages are variable rate.
The Baltics performed quite well in terms of house price changes from a year earlier, but the latest quarterly data presents a picture of a region whose housing markets are in trouble.
In Latvia apartment prices have dropped by 7.7% to September 2007, over a quarter earlier. Lithuania’s apartment prices have stagnated at LTL 12,500 (US$5,213 or €3,620) per sq. m. in the last two quarters. In Estonia quarterly house prices increased by 23.4% y-o-y to Q3 2007, lower than the 28.6% growth to end-2006.
Norway’s housing markets are showing signs of nervousness, despite a strong performance this year. The house price index for the entire country increased 11.6% y-o-y to Q3 2007 (11.9% in real terms due to slight deflation). However, prices in the metropolitan area of Oslo-Baerum fell 0.5% from Q2 to Q3 2007. The housing market is facing more uncertainties as the Norges Bank raised its key policy rate by 25 basis points to 5.25% in December 2007.
* Last year available
Source: series, the list of property prices, data and sources here
In 2007, the U.S. housing market crashed, and the Europe of the real estate market has slowed. But the prices of houses in the Asia-Pacific region has grown.
Bulgaria saw the most powerful of the world to the rise in house prices of 30.6% (15.4% in real terms) at the end of Q3 2007 compared to a year earlier.
Shanghai's red hot housing market continued to recover, despite efforts by the government to cool the market. The price of homes has increased by 27.85% at the end of October 2007 compared with a year earlier, a significant turnaround from 0.6% decrease in 2006.
Singapore has recorded an annual increase in house prices of 27.6% (24% in real terms) at the end of Q3 2007, significantly higher than the 7.6% price increase over the same period in 2006. In real terms, Singapore is the country with the best performance of the housing market, taking into account inflation of only 2.66%.
House prices have increased by more than 10% from year to year (yoy), in nominal terms, in many developing countries - the Philippines, Colombia, South Africa and Hong Kong. However, when adjusted for inflation, the price increases were generally much lower.
In Europe, most countries have registered unimpressive house price trends yoy in 2007, apart from Norway and Estonia.
Prices of real estate in Ireland, the decline began in 2007, the first time in more than 15 years. The Irish housing market is the largest and longest boom in housing prices in developed countries, in recent memory.
The prices of urban land in Japan, the six largest cities rose by 7.75% in the first half of 2007. Although Japan national index of urban land prices fell by 1.48% in 1H 2007, this represents an improvement of 2.8% of the price decline in 2006. The Japanese index of the prices of urban land is generally believed to lag reality, a significant recovery is underway in the Japanese real estate market.
Interest rates
The recent downturn in property prices in Europe and the United States is mainly due to the rise in interest rates.
In Europe, the European Central Bank (ECB) raised its key interest eight times in 15 months. The rate was increased to its current level of 4% by June 2007 from its historically low level of 2% in November 2006.
In the United States, the Federal Reserve Bank raised its key lending rate 17 times in 24 months during 2004-2006. The federal funds rate has risen sharply Americans from its historic low of 1% in May 2004 to 5.25% in June 2006.
As signs of strain on the housing market began to emerge in mid-2006, the Fed has kept its key interest rate at 5.25% for 14 months to August 2007.
When the boom in the real estate market in the United States turning to a bust, the Fed cut rates in September by 50 basis points and, in October and December by 25 basis points, bringing the rate to 4.25 %.
The central banks of the United Kingdom and Canada reduced interest rates by 25 points in December 2007.
Some would say the Fed has raised rates "too much, too soon," and it is now frantically reducing interest rates to avoid a recession. Others, however, suggested that the weakness of the mortgage market surveillance of American loan is the leading cause of the current crisis, combined with a structural shift toward off-balance sheet loans.
The ECB has stubbornly slow adjustments, however, allowed the euro area, the diversity of housing markets to adjust pretty well. Only the most expensive housing market, Ireland, has crashed, while the rest are mostly slow.
USA and Canada
ANNUAL HOUSE PRICE CHANGE 2007* (%), ADJUSTED FOR INFLATION |
| | INFLATION-ADJUSTED | NOMINAL |
| Singapore | 24.29 | 27.59 |
| China (Shanghai) | 20.04 | 27.85 |
| Bulgaria | 15.42 | 30.59 |
| Estonia (Tallinn) | 15.08 | 23.38 |
| Norway | 11.93 | 11.56 |
| Lithuania | 11.43 | 13.64 |
| Philippines | 9.88 | 13.04 |
| Hong Kong | 9.44 | 11.25 |
| Australia | 8.60 | 10.63 |
| Sweden | 7.86 | 9.86 |
| Japan (6 cities) | 7.86 | 7.75 |
| UK | 7.49 | 9.68 |
| France (Paris) | 7.01 | 8.27 |
| South Korea | 6.53 | 9.01 |
| Colombia | 6.40 | 12.82 |
| Poland | 5.81 | 8.38 |
| New Zealand | 4.59 | 6.67 |
| South Africa | 3.77 | 12.52 |
| Canada | 3.66 | 6.13 |
| Finland | 3.29 | 5.88 |
| Spain | 2.88 | 5.31 |
| Netherlands | 2.44 | 3.77 |
| Denmark | 2.29 | 3.95 |
| Italy | 2.08 | 5.6 |
| Switzerland | 1.91 | 2.56 |
| Malaysia | 1.73 | 3.2 |
| Greece | 1.54 | 4.18 |
| Germany | -0.40 | 2.04 |
| Latvia | -1.02 | 10.22 |
| Indonesia | -1.18 | 5.24 |
| Japan | -1.38 | -1.48 |
| Portugal | -1.68 | 0.49 |
| Israel | -1.86 | -0.51 |
| Thailand | -2.81 | -0.78 |
| Ireland | -9.08 | -4.68 |
| US (NAR) | -8.46 | -5.07 |
| US (FHFB) | -6.79 | -3.49 |
| US (OFHEO) | -0.56 | 1.79 |
| * latest available
Source: various series, list of house prices, data and sources here |
US house prices decreased by 5% year on year to October 2007, to an average of US $ 207,800, based on sales recorded by the National Association of Realtors (NAR) (or 8.46% real terms).
The Office of Federal Housing Enterprise Oversight (OFHEO), which produces a doubt more widely based on the index, saw a price increase of 1.8% at the end of Q3 2007 compared to a year earlier, reflecting to a decline of 0.6% after adjustment for inflation. 10 States in the OFHEO index experienced a fall in prices, including Michigan (3.7%), California (3.6%), Nevada (2.4%), Massachusetts (2.3%) Rhode Island (2.2% and Florida (2.1%). only two states Recorded growth in house prices of over 10% year on year to the end of Q3 2007, Utah (12.9%) and Wyoming (11.8%).
Canada's housing markets are also showing signs of slowing. The price index of new homes rose by 6.1% at the end of October 2007 from the previous year (3.7% in real terms), less than the 11.4% (10.3% in real terms) yoy to higher prices Oct 2006.
Europe
Most European property market slowed. Ireland's house prices continued to plunge, with a 4.68% decline year-on-year to the end of October 2007. When adjusted for inflation, the decline is more pronounced at 9.1%. The Irish housing market is vulnerable to interest rate changes, as 85% of mortgages are at variable rates.
The Baltic countries performed fairly well in terms of trends in house prices compared to a year earlier, but the latest quarterly data presents a picture of a region whose housing markets are in dire straits.
In Latvia, apartment prices fell by 7.7% in September 2007, more than a quarter earlier. Lithuania's apartment prices have stagnated at LTL 12500 (US $ 5213 or € 3,620) per sq M. In the last two quarters. In Estonia quarterly property prices rose by 23.4% yoy in Q3 2007, lower than the 28.6% growth at end-2006.
Norway in housing markets are showing signs of nervousness, despite a good performance this year. The house price index for the whole country increased by 11.6% year on year in Q3 2007 (11.9% in real terms because of a slight deflation). However, prices in the metropolitan area of Baerum-Oslo fell to 0.5% from Q2 to Q3 2007. The housing market is facing more uncertainties that Norges Bank raised its key interest rate by 25 basis points to 5.25% in December 2007.
Spain has registered 5.31% growth year-on-year real estate prices in Q3 2007, the lowest rate of increase in nine years. Interest rates were higher dampened demand, and banks have become very cautious in granting housing loans.
A slowdown was also evident in the UK, although less than expected. British house prices rose by 9.7% year on year in Q3 2007, less than 2006 year-on-year increase of 10.5%. When adjusted for inflation, the rise in house prices in the 3rd quarter of 2007 was 7.5%, slightly higher than the 7.3% increase in 2006.
The price of real estate in Italy and Greece have also cooled. Mortgages on these markets are essentially based on variable interest rates.
Although mortgages in Denmark, France and Germany are mostly based on fixed interest rates, their housing markets have cooled, however. Other European countries that have experienced a slowdown in house prices are Sweden, Poland, Finland, the Netherlands and Switzerland. France has increased tax deductions on mortgage interest rates, a measure should hold strong demand for housing.
Asia
Housing markets in several Asian countries has gained momentum during the first three quarters of 2007, reflecting to some extent the continuing recovery in the Asian crisis of 1997.
The sharp rise in property prices in Singapore, South Korea and Japan were mainly due to strong economic growth. Mortgage Markets in Asia are generally underdeveloped. Hence the effect of changes in interest rates on the housing market is indirectly channeled through the entire economic performance. With electronic products as the main export products of developing countries, economic growth is expected to fall if the global economic recession took place in 2008.
In the Philippines, the demand for houses and condominiums came mainly from families of Filipinos overseas.
Price increases in China are subject to strong government intervention. Left free, real estate prices are expected to increase due to economic growth and rapid urbanization. The oil boom in the price are the Beijing Olympic Games in 2008 and the 2010 World Exposition in Shanghai.
In Thailand, political problems have led to low economic growth and the decline in property prices. Property price changes, Indonesia and Malaysia remain unimpressive. Although the national index of house prices in Indonesia rose by 5.2% in nominal terms, at the end Q-3 2007, the index actually fell by 1.2% when adjusted to inflation. In Malaysia, the index of house prices rose by 3.2% (1.7% in real terms) in Q2-2007 as compared to a year earlier.
Pacific
Prices of real estate in Australia continues to recover from slowdown of the housing market during 2004 to 2005. The price at home for eight cities grew by 10.6% in September 2007 compared to the previous year, which is slightly higher than the annual increase of 10.1% in September 2006. Except for Sydney and Perth, Australia, the other big cities have seen increases in house prices of over 11% year on year to September 2007.
The availability of housing finance combined with a lack of supply fuelled house price increases in 2007, despite rising interest rates. Population growth of immigration and the skills shortage in the construction sector has also contributed to higher prices.
Two figures for residential property prices are likely to persist in 2008 in Australia.
No radical changes in immigration policy should now that the Labour Party is in power, and new systems to help low-income renters and home buyers are likely to increase the demand for housing.
Signs that New Zealand has the boom in house prices is coming to an end came in the second half of 2007. Although the national median house price rose by 6.6% year on year to 352,000 New Zealand dollars, in November 2007, it was the lowest annual increase in house prices since February 2003.
The Reserve Bank of New Zealand (RBNZ) raised its reference interest rate four times between March and July 2007 to 8.25%. The market downturn is expected to continue in 2008, and is expected to last until 2009.
Middle East and Africa
The depreciation of the dollar against major currencies could benefit the Middle East property markets. As the currencies of the countries of the Gulf Cooperation Council (GCC) are pegged to the American dollar, the markets for their goods become less expensive as the dollar depreciates - when everyone expects their currency eventually be revalued against the dollar American.
The biggest concern is oversupply. Dubai is flooded with new properties to be delivered in 2008 and 2009. The fall in demand from international buyers because of a slowdown in the global economy could exacerbate the problem. The speculative nature of the housing market makes it very sensitive to Dubai.
In South Africa, the boom in house prices came to a stop. The annual growth in house prices peaked at 33% at end-2004. Since then, the house price growth began slowing down, and dropped to 13.6% year on year to the end of October 2007. Corrigés of inflation, the index of house prices rose by only 5.3%. The slowdown was due to higher interest rates, lower economic growth, and The National Credit Act, implemented in June 2007, which imposed stricter rules on loans.
Israel'smarket showing signs of recovery. The average price of owner-occupied housing increased by 4.6% (2.5% in real terms) in Q3 2007 from the previous quarter. However, it is still 0.5% () 2006
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