Global house prices defy economic climate

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The Global House Price Index increased by 3% in 2015, up from 2.3% in 2014. Concerns over the global economy have failed to dent buyer confidence; instead the lingering low interest rate environment influenced sentiment.

Residences -Penthouse
Residences -Penthouse

Despite the fragile state of the global economy the world’s housing markets recorded 3% growth on average in 2015.

More than forty-three of the 55 housing markets tracked in our Global House Price Index saw prices rise (78%), up from 10 countries (19%) in the aftermath of Lehman’s collapse in Q2 2009.

Turkey leads the rankings with prices rising 18% during 2015. Increasingly viewed as a safe haven for Middle Eastern investors, Turkey is bridging East and West whilst seeing strong population growth.

Although Hong Kong’s prices increased in 2015, the rate of growth has slowed significantly from 17% in the year to September to 7% in the 12 months to December 2015. The slower rate of growth is attributable to rising supply (more than 11,200 homes were completed in 2015), as well as china’s financial market volatility and the expectation of increasing interest rates.

Data from China’s National Bureau of Statistics shows house prices rose marginally in 2015 (0.4%) having reached their peak in the first quarter of 2014 before falling 6% over the next 12 months. Cities such as Shenzhen and Shanghai continue to outperform the national average due in part to favourable government policies and strong demand in first-tier cities.

Australasia was the strongest-performing world region in 2015, buoyed by the strong performance of New Zealand and Australia, both of which saw annual price growth in excess of 10%.

Housing affordability, or the lack of it, is rising up policymakers’ agendas worldwide.

According to the latest data from the OECD, which measures house prices against incomes for 24 of its 34 members, Belgium and New Zealand are currently the world’s least affordable markets, whilst home ownership is most accessible in South Korea and Japan.

Knight Frank’s outlook for 2016 is muted. The index’s overall rate of growth is expected to be weaker in 2016 than 2015. The global economy is experiencing a potentially dangerous cocktail of low oil prices, a strong dollar and a continued slowdown in China.

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