New Report Shows Global Property Market Weakening In The Third Quarter

A new report paints a dim picture of the global property market, as positive trends reversed in many debt-ridden European countries. While the Asia-Pacific region leads with nearly …

A new report paints a dim picture of the global property market, as positive trends reversed in many debt-ridden European countries. While the Asia-Pacific region leads with nearly 10 percent growth, signs point to a weakening worldwide housing recovery as overall more than 50 percent of nations reported negative numbers. See the following article from Property Wire for more on this.

The global real estate price recovery is losing its steam with over half of all countries seeing negative growth in the third quarter of 2010, a report published today (Monday December 06) shows.

Average annual global house price growth in the third quarter was 3.1%, according to the latest Knight Frank Global House Price Index. The strongest world region was Asia Pacific with average growth of 9.9%, and the weakest was Europe at 0.8%.

Although the growth rate is up substantially on the same period in 2009 when it was -6.2%, it is down on the 4.3% of the second quarter of 2010.

The critical driver of this weaker recent performance is the number of countries tipping back into negative growth in the most recent quarter. Some 14, mostly European, countries saw negative growth after they had experienced several quarters of rising prices.

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In the previous quarter 67% of all countries saw positive annual growth, but only 46% experienced growth in the most recent quarter. It means there is a growing gap between the less debt afflicted European economies of Austria, France and Finland, ranked 8, 9 and 12 in the league table, and their neighbors to the south and west of the continent, with Greece, Spain and Ireland ranking 38, 41 and 48 out of 48 respectively.

Liam Bailey, head of residential research at Knight Frank, said on the positive side prices are rising for the first time since late 2008 in each of the six world regions. Asia Pacific is up 9.9%, the Middle East up 5.1%, North America up 4.2%, South America up 3.5%, Africa up 3% and Europe up 0.8%. And prices are rising in 67% of the 48 countries on an annual basis.

‘Unfortunately these upbeat headlines do not tell the full story. Digging into the data we can see that there are still considerable issues playing out across the global markets. While a majority of countries are reporting positive annual growth, 56% saw prices fall in the third quarter of this year,’ he explained.

‘There is growing evidence that the global housing market recovery, which began in early 2009 following the desperate conditions in 2007 and 2008, may just be beginning to run out of steam. Nearly 30% of countries which had experienced strengthening conditions in 2010 saw quarterly price growth turn negative in the third quarter, Led by European markets the list includes Greece, Iceland, Netherlands, Norway, Portugal, Slovenia and the UK. Outside of Europe the list also extends to cover China, Canada, Columbia, Dubai, New Zealand, South Africa and Taiwan,’ he added.

In Europe annual growth varies from an increase of 26.1% in Latvia to a fall of 14.8% in Ireland. The performance of Latvia’s housing market in recent years has been extremely volatile. A year ago it was the poorest performer. But the good news for Ireland is that the rate of decline is slowing with prices falling by 1.3% in the third quarter compared to 1.7% in the previous quarter.

In the US annual price inflation has fallen back to 0.6% compared to 4.2% in the previous quarter and average prices now stand at their mid-2003 level. ‘Whilst the weakening of growth in the third quarter is partly due to the end of the government’s tax incentive for first time buyers, the additional issue of high supply volumes, much of it hidden due to pending foreclosures, is continuing to blight the housing market,’ said Bailey.

Efforts to cool the Asian housing markets appear to be taking effect with more muted quarterly growth recorded in Hong Kong, Singapore and China. ‘In China, central government intervention in the housing market, mainly aimed at controlling strong price growth, is being focused on increasing the supply of affordable housing. The government plans to provide more support for developers of low-income housing, but crucially it has stated that it will hold provincial governments accountable for failing to curtail price inflation by not expanding their own affordable housing programs,’ Bailey said.

‘Our Hong Kong based research team reports its confidence that prices in China’s key cities may avoid a significant correction in prices, especially as local governments fine-tune their land supply programs. Despite this positive outlook they still anticipate price falls of up to 20% in Beijing, Shanghai, Guangzhou and Shenzhen in 2011,’ he added.

This article has been republished from Property Wire. You can also view this article at
Property Wire, an international real estate news site.


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