Knight Frank’s Global House Price Index, Q2 2015

Global House price index records weakest growth in four years.

  • The Knight Frank Global House Price Index increased marginally by 0.1 per cent in the year to June 2015
  • The Hong Kong market continues to defy its policymakers’ cooling measures with mainstream prices up 20.7 per cent year-on-year
  • In Dubai, weaker demand, a strong US dollar and on-going cooling measures led to a decline of 12.2 per cent year-on-year
  • Although China saw prices fall 5.7 per cent year-on-year, it recorded positive quarterly growth of 0.2 per cent
  • Europe is no longer the weakest performing world region, a title it has held for 15 consecutive quarters

Global house prices shifted marginally in the year to June 2015 rising by only 0.1 per cent. Lingering concerns over the Eurozone economy, jitters in global stock markets and discussions of when, not if, a US rate rise occurs is impinging on growth. Kate Everett-Allen examines the latest figures.

As China supplants Greece as the world’s key economic concern, and emerging markets look increasingly anaemic, there is a global quest for growth which is evident at a macroeconomic level but also when analysing house price performance.

In annual terms the Global House Price Index rose by only 0.1 per cent in the year to June, its weakest rate of growth since the final quarter of 2011. Of the 56 housing markets tracked, 27 per cent recorded an annual decline in prices but back in 2011 44 per cent of housing markets fell into this bracket.

Despite stringent cooling measures, Hong Kong (up 20.7 per cent) and China (down 5.7 per cent) find themselves at opposite ends of the annual rankings. Increasing liquidity and the flow of wealthy mainland Chinese investors into Hong Kong’s residential sector meant the number of new homes sold in the first half of 2015 exceeded 8,700.

The recent volatility in the Chinese stock market has underlined the fragility of the Eurozone’s recovery and has pushed the likelihood of a rate rise by the US Federal Reserve further back – good news for homeowners in the US (and beyond) but bad news for corporate balance sheets.

Housing markets in China and the US, two countries which together account for around 33 per cent of global GDP, are following divergent paths. Since the start of 2014 mainstream prices in China have fallen on average by 6.2 per cent while the average price of a residential property in the US is up 7.6 per cent over the same period.

In Dubai, mainstream residential prices fell by 2.8 per cent quarter-on-quarter and declined by 12.2 per cent in the year to June. Weaker demand, a strong US dollar and ongoing cooling measures have dampened sales volumes in the mainstream sector.

Europe is no longer the weakest-performing world region, a title it has held for 15 consecutive quarters. On average prices across Europe increased by 2.8 per cent year-on-year with Turkey, Estonia, Luxembourg and Ireland all achieving double-digit annual price growth.

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Data Digest

The Knight Frank Global House Price Index established in 2006 allows investors and developers to monitor and compare the performance of mainstream residential markets around the world.

The index is compiled on a quarterly basis using official government statistics or central bank data where available. The index’s overall performance is weighted by GDP and the latest quarter’s data is provisional pending the release of all the countries’ results.

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