The Global Housing Market

by Mark Johnston

The ‘boom’ conditions that were experienced between 2004 and 2007, when global housing markets recorded double digit annual price growth, are now a distant memory.

Mounting pressures on the global economy, with politicians seemingly helpless to get to grips with the euro zone crisis, has reawakened fears of a double dip recession and not just for Europe but around the world.

This economic uncertainty is therefore reflected in the worlds housing markets, during the third quarter of 2011 house prices fell in 54% of the countries that are monitored by the global house price index.

The Knight Frank global house price index, which tracks the worlds mainstream housing market performance, showed zero growth in June to September of 2011. This was the weakest growth performance since 2009.

The Knight Frank global house price index is the definitive means for investors and developers to monitor and compare the performance of residential markets across the world.

According to the global league table popular destinations for British holiday home owners such as Spain and Cyprus are suffering at present.

Some economic experts believe that the market in Spain has ground to a halt with many expats wanting to sell and no one wanting to buy in this particular economic climate.

Spain has approximately 1.5 million brand new homes on the books of banks that are basically unsaleable.

According to the league table of 51 countries surveyed, Ireland is firmly planted at the bottom; this is due to the average property losing 14.3% of their value in a year. It is also estimated that 1 in 6 residential mortgage holders in Ireland is either in arrears or has slipped in to negative equity.

Two other different surveys recently conducted about Irish property showed that house values in parts of Dublin alone have plummeted by as much as 61% from their peak in 2007.

Despite the turmoil that is facing PIIGS economies (Portugal, Ireland, Italy, Greece and Spain) some data suggests that their housing markets may be over the worst. Although prices have fallen over the last few years, it seems the pace of decline has slowed.

The French and Turkish property values however are up more than 6% annually, according to the table.

At the top of the price index at the moment is Hong Kong, were house prices are up nearly 20% annually, followed closely by Estonia who has seen a 14% annual rise in property value.

The UK finds itself in 30th place on the price index table, with falls in property value of -0.5%.

The UK housing market however has remained stagnant; this is mainly due to the fact that house prices have being held relatively level because most people are on such low mortgage rates that they are sitting in their homes. Although this does suit the banks as they do not want a market crash leaving them with assets reducing in value.

Many believe that looking forward, housing prices worldwide are likely to show little improvement on the whole.

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