Global Real Estate Prices Have Worst Showing Since 2009

While real estate markets in some countries are still doing well – globally the real estate picture is not looking so rosy. According to the Global House Price …

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While real estate markets in some countries are still doing well – globally the real estate picture is not looking so rosy. According to the Global House Price Index by Knight Frank, from a global perspective real estate prices are performing as badly as they have since 2009 – the height of the recession. The various Eurozone crises are causing all sorts of trouble for Europe’s real estate markets, helping to bring down overall global real estate performance. For more on this, continue reading the following article from Property Wire.

Global property prices have seen their weakest annual performance since the depths of the recession in 2009, recording only 0.9% growth in the year to March 2012, according to the Global House Price Index from real estate group Knight Frank.

Doubts over the Eurozone’s future, along with Asian governments’ staunch efforts to cool their markets and deter speculative investment, have taken their toll and house prices were static in the first three months of 2012.

It is the first time since the fourth quarter of 009 that annual price growth has slipped below 1% and Ireland has fared the worst with price falls of 16.3%, much worse than Greece that is second worst with 9.8%. Portugal, which is also suffering economic woes, saw prices fall by 8.6%.

The weakening sentiment is due to the Eurozone’s malaise, lower GDP forecasts and a concern that the global economic recovery is struggling to gain any real traction, the report says.
 
‘The uncertainty surrounding the sovereign debt crisis in Europe and the political paralysis in Greece is influencing trade decisions and consumer confidence worldwide,’ it explains.

There are few signs to boost the confidence of European householders. Unemployment is rising due to cuts in public spending, causing wages and disposable incomes to be depleted, thereby weakening housing demand. On average house prices in Europe remained flat in the year to March 2012.

Globally Brazil recorded the strongest growth at 23.5% followed by Estonia at 13.9% and India at 12%.The Uk saw growth of just 0.2%, France saw growth of 3.9% and recovery in Dubai is shown by annual price falls of 1.1%.

Even although prices have surged in India, overall Asia has a cooling property market. The region saw average annual price growth exceed 16% in the first quarter of 2010 but two years later this figure is closer to 2%. However, the region’s growth still exceeds the global average but the margins have shrunk considerably.

‘The Chinese housing market has had a tough 12 months as developers and purchasers alike have had bank finance squeezed as a consequence of the ongoing cooling measures. Lending restrictions, new taxes, the curbing of multiple property purchases, and new regulations to restrict the inward flow of hot foreign money have had the desired effect,’ said Nicholas Holt, Knight Frank’s director of research in Asia.

The report says that the next three to six months will be critical for global housing markets. ‘If discontent in Spain and Greece can be appeased and France and Germany agree on a firm path of growth promoting policies, the crisis could ease. Either way, it will be 2013, and possibly the latter half, before the index starts to strengthen,’ it concludes.

This article was republished with permission from Property Wire.

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