House prices up around the globe led by annual growth of over 23% in Iceland
House prices in key countries around the world increased by an average of 5.6% in the year to June 2017, led by Iceland, the latest global property index shows.
Average prices increased by 23.2% in Iceland with the nation leading global growth for the third quarter in a row, according to the index report from international real estate firm Knight Frank.
Prices also increased steeply in Hong Kong with an annual rise of 21.1% in the second quarter, followed by a rise of 14.6% in Malta, 14.2% in Canada and 12.7% in both Turkey and the Czech Republic.
Overall prices increased in 49 countries out of the 55 covered by the index and the report says that economic fundamentals remain firm, unemployment is down and wages are rising, yet the number of homes for sale have declined for the past four years, indicating tighter housing markets.
The data from the index also shows that New Zealand slipped from third position in the rankings to tenth as annual price growth moderated to 10.4% and five of the top 10 rankings are occupied by European countries this quarter.
China’s average price growth dipped marginally to 9.6% in the 12 months to June 2017 while a number of countries, including Japan, Morocco, Poland, Greece, Singapore and Ukraine saw prices fall and in Finland they were flat.
The report points out that both Iceland and Hong Kong have seen their annual rate of price growth accelerate over the last three months, in Iceland’s case from 17.8% to 23.2% and for Hong Kong, from 14.4% to 21.1%.
Home to a population of 344,000 and with only 130,000 homes, Iceland attracted more than 1.7 million foreign visitors in 2016. Such demand for accommodation led to a new law being introduced in January which requires those renting their homes for longer than 90 days, or generating a rental income of more than US$9,500 per year, to obtain a special business licence.
The report suggests that Hong Kong’s strong performance is perhaps counterintuitive given there have been three interest rate rises in the last year but like Iceland, strong demand and limited supply are behind its strengthening prices.
Local buyers in Hong Kong, along with mainland Chinese investors, are keen to hedge against the yuan’s depreciation and Hong Kong remains Asia’s strongest performing market over a 12 month period. However, an analysis over five years puts India out in front, recording average price growth of 70% compared to Hong Kong’s comparable figure of 65%.
New Zealand and Canada, two countries whose housing markets have moved in tandem for the last few years, are now moving in opposite directions. New Zealand slipped from third position in the rankings to tenth.
China’s average price growth dipped marginally to 9.6% in the 12 months to June. Reports suggest developers are raising their sales targets for 2017, undeterred by policymakers’ efforts to rein in speculative demand and control price inflation via a series of cooling measures. The world’s other heavyweight in housing market terms, the US, saw average prices climb 5.8% over the 12 month period.
The report also points out that while 20 European countries saw their overall market’s direction improve in the first quarter when compared with the previous quarter, in the second quarter only nine fell into this bracket. The UK with annual growth of 2.8% is towards the bottom of the table.