Horizon-Consultancy | South Africa | Europe | Investment Property

Global housing on the mend - December 2009

Investors across the globe are starting to return to residential property markets, following what has arguably been one of the longest and strongest real estate slumps the world has ever seen.
The Knight Frank global house price index for third quarter 2009 released earlier this week shows that house prices are now rising in almost 70% of the locations tracked by the British property group, compared to less than 50% in second quarter 2009. Knight Frank compares house price movements in 42 countries.

Liam Bailey, head of residential research at Knight Frank, says although house prices in almost 60% of the countries included in the index are still lower than they were a year ago, most markets have now turned the corner.

Singapore reported the biggest quarterly jump in prices with growth of 15,2% in third quarter. That was followed by Hong Kong (6,3%), Canada (4,9%), Australia (4,2%) and New Zealand (4,2%). South Africa ranks as the sixth fastest growing housing market in Knight Frank's index, with prices up 3,8% in the three months to September 2009 (quarter-on-quarter).
The UK and US, two of the countries hardest hit by the credit crunch and global recession, are also back in positive growth territory with quarterly price increases of 3,7% and 3,2% respectively.

On an annual basis, Israel is now the world' fastest growing housing market with prices rising 13,7% in the year to September 2009. That was followed by Austria (9,7%), Malta (9,7%) and Switzerland (7%). South Africa ranks 15th in the annual growth stakes with prices up 1,3% over the 12-month period.

Dubai is the biggest loser, with prices sliding a massive -47% in third quarter 2009 year-on-year (y/y). There are also a few European countries where prices are still falling on the back of what appears to an oversupply of stock. These include Spain, Denmark and Ireland.

Bailey says Dubai's recent debt woes have no doubt dented investor confidence in that country. The problems now seen in Dubai's housing market underscore the fact that the global housing recovery will not necessarily be smooth sailing, says Bailey.

However, he believes that any further house price falls are likely to be corrections rather than the start of another round of drastic reductions.

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