The global house price boom appears to be continuing ever more strongly. In a survey conducted by the global property guide and using inflation-adjusted figures, house prices rose in 25 of the 38 world’s housing markets which have so far published housing statistics for the first quarter of 2015. The more upbeat nominal figures, more familiar to the public, showed house price rises in 31 countries, and decline in only 7.
The world’s strongest housing markets are in Europe. Ireland remains the world’s top performer, with housing prices surging by 17.57% during Q1 2015, a remarkable upturn from a year-on-year (y-o-y) increase of 7.49% in Q1 2014 and the highest annual rise in almost 15 years.
Three of the five strongest housing markets in the survey are in Europe. In all, thirteen European markets saw house prices rise more during Q1 2015 than the previous year, and only six showed weaker performance.
On the other hand, house prices rises in the United States and Brazil, among others, have slowed dramatically. In Dubai for instance, after spectacular house price rises from 2012 to 2014, residential property prices fell by 2.72% during the year to Q1 2015.
Only three of the ten Asian markets for which figures are available performed better than the previous year, while the remaining seven housing markets performed worse – indicating that Asian countries continue to lose momentum.
Hong Kong’s residential property prices surged 14.36% during Q1 2015, a sharp turnaround from the drop of 2.27% during the previous year Q1. Likewise, in Tokyo, Japan, the average price of existing condominiums rose by 6.32% during the year to Q1 2015, up from a modest growth of 3.22% the previous year. Property prices increased 0.89% q-o-q in Q1 2015. The Yen has however depreciated significantly in recent years.
In South Korea, the housing purchase price index increased 1.31% during Q1, a slight improvement from the annual rises of 0.86% in Q4 2014 and 0.59% in Q3 2014, and an annual decline of 0.37% in Q2 2014. House prices dropped by 0.37% q-o-q during the latest quarter.
On the flipside of Asia’s top three performing nations, China’s once booming property market is now falling. In an effort to avert a property market crash, the government recently announced a plan to purchase unsold residential properties and convert them into low-cost housing to reduce inventory levels. Moreover, over the past year the government has eased property curbs. The central bank also loosened mortgage restrictions in September last year, giving homeowners who have paid off their mortgages and want a second property the same advantages as first-time buyers, including a 30% minimum down payment, compared with a minimum of 60% previously imposed. The central bank reduced reserve requirements for major banks in January 2015 and cut its benchmark one-year lending rate three times since November 2014, to reach 5.1% in May 2015.
Singapore’s housing market also remains depressed, with house prices falling by 3.45% during the year to Q1 2015, its sixth consecutive quarter of house price falls. House prices fell by 1.12% q-o-q during the latest quarter.
Both demand and supply are falling in this diminutive island nation. The number of private residential units sold plunged 27% to 1,258 units in Q1 2015, according to the Urban Redevelopment Authority. On the other hand, the number of private residential units launched also plummeted by about 40% to 1,189 units over the same period.
Singapore’s economy grew by a modest 2.6% in Q1 2015 from a year earlier, up from the 2.1% growth in the previous quarter, according to the Ministry of Trade and Industry (MTI). The economy is expected to grow between 2% and 4% this year, after growth of 2.9% in 2014, 3.9% in 2013, 2.5% in 2012, and 6% in 2011.
Vietnam’s housing market also showed lackluster performance, with house prices in Ho Chi Minh City falling 0.48% y-o-y in Q1 2015. To boost demand, on July 1 the government introduced a new foreign home ownership law allowing foreigners with a valid visa and foreign companies and international organizations operating in Vietnam to buy houses and apartments. Currently, only those married to Vietnamese or foreigners deemed to be contributing to national development can own property.
Vietnam’s GDP grew by 6.03% in Q1 2015 from a year earlier, after growth rates of 5.98% in 2014, 5.4% in 2013, 5.2% in 2012 and 6.2% in 2011, according to the IMF.
In Thailand, housing prices rose by 3.4% y-o-y in Q1 2015, slightly down from the annual growth of 3.64% last year. In a quarterly basis, house prices increased 0.49% during the latest quarter. The economy is projected to grow by a modest 3.7% this year, after annual growth of 0.7% in 2014, 2.9% in 2013 and 6.5% in 2012, according to the IMF.