Brazil records best house market growth but eurozone struggling, global property index shows
12-09-2012
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Global house prices increased by an average of 1.1%, the latest index from Knight Frank covering the second quarter of 2012 shows.
In Brazil house prices increased by 18.4% in the second quarter of 2012 compared with the same quarter in 2011. This was followed by a rise of 11% in Austria and 10.5% in Turkey.
It is the index’s strongest quarterly rise since the last quarter of 2009 but Knight Frank cautions against reading too much into the figures as the ‘modest recovery’ is due to the steady performance of a core group of countries and markets in the eurozone are performing poorly.
‘It's unlikely to signal a meaningful upturn in the health of the world's housing markets as the remainder of 2012 is set to see little stimulus for growth,’ the report says.
It points to a few stellar performances by some of the world's most influential economies such as the United States, Canada and Hong Kong where prices rose by 6.9%, 3.2% and 7.6% respectively in the second quarter of 2012, up from -1.7%, 0.4% and 1.8% respectively in the first three months of the year.
‘But it's not all good news. These improved performances can do little to offset Europe's poor performing housing markets. Here, the lack of available finance, shrinking job markets and low consumer confidence are stifling housing demand,’ the report adds.
The results show that 13 of the 17 eurozone members are in the bottom half of the table when ranked according to price growth in the three months to June. ‘The summer period has seen the eurozone's status quo preserved but the autumn months are expected to bring renewed debate and more instability as the potential 'Grexit' enters the minds of policymakers and the global media once more,’ says the report.
China, which alongside the US has the largest bearing on the world's housing markets and has largely propped up the index since early 2009, is now providing mixed messages. Although prices here are down 7.1% in annual terms they fell by just 0.1% in the last quarter. A range of cooling measures have helped to curb speculative demand but two interest rate cuts since June are reinvigorating the new homes market with prices now edging upwards in 49 of China's 70 key cities.
Having seen prices fall by 34.7% peak to trough between the second quarter of 2006 and the first quarter of 2012, the US housing market is gaining traction and prices are finally rising. Mortgage demand is up, new construction levels are improving and foreclosures are at their lowest level since the final quarter of 2007.
Despite the index's 1.1% growth this quarter, there is likely to be little stimulus for the world's housing markets in the near future, the report points out. In Asia large scale house building programmes, higher property taxes and the deterrence of 'hot' foreign money will keep a lid on price inflation.
In the Eurozone there is little prospect of a confidence inducing resolution to the debt crisis. Only the US seems capable of providing any meaningful impetus but the forthcoming Presidential Election in November and debate over the direction of future housing policy could contain growth, at least in the third quarter.
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