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Latest Data Shows Global Property Maybe On The Turn

News Posted On: 30 November 2012

International property has had a roller-coaster ride over the last 4 years. It seemed like the downturn was to be short-lived when things started to turn favourably in the latter half of 2009, with international indices like the Global Property Guide and Knight Frank recording positive metrics such as overall growth, and/or growth in more countries than falls, and/or prices falling slower etc.

However, this period turned out to be the eye of the storm, because by the end of 2010 things were back on the slide again, with more countries falling than rising and the opposites of all the above. In hindsight (although it was common knowledge at the time but optimism overcame realism for many) we all know that this bounce was brought about by government intervention and (what did they call it again...) stimulus as they reduced interest rates and some even printed money to try and hold the recession at bay. For the UK and US the stimulus may have slightly slowed the downturn, but in the likes of China and Singapore where there was no recession the stimulus was causing growth and this was pushing up the overall index as well.

But now, things look to be turning the corner again, but this time we have nothing to pin it on apart from the fact that more and more markets have found their bottom and are clawing their way back up. According to the latest release of the Knight Frank global house price index, global house prices rose 1.1% on average in the three months ending June, the strongest quarterly growth since Q4 2009. During the year ending Q2 prices rose 0.7% according to the report, and 25 out of the 55 countries covered experienced accelerating growth.

Europe should be dragging the index down, but 5 out of the top 10 markets are in Europe. Austria is in 2nd with prices up 8.5% on the quarter and 11% on the year, beaten by Brazil with prices up 18.4% on the year. Turkey continues to perform well in 3rd with prices up 3% on the quarter and 10.5% on the year, followed by Russia on almost the same, 3.1% on the quarter and 9.9% on the year. Columbia takes 5th with prices up 7.7% on the year, making Iceland unlucky in 6th as it also saw annual growth of 7.7%. Estonia takes 8th with prices up 6.9% on the year, beaten by Hong Kong's 7.3%. Norway and Germany complete the top 10, both with annual growth of 6.7%.

Although it isn't in the top 10 America has to get a mention, as it has had one of the most discernible bottoms of all the crash/recovery cycles. Over the last few months America has abandoned all talk of shadow inventories and lost generations of home-owners, as it has been positively replaced by reports of rising sales, falling inventories and rising prices. According to the Knight Frank index American house prices grew 1.2% in the year ending Q2, but 6.9% on the quarter, making it 25th best performing market in the world.

The 25th placed market of 25 markets seeing faster growth, so one could argue that America's positive performance has tipped the balance in favour of growth. Many have argued that as America led the world into the crisis it would lead us back out as well. There is grounds to support the theory and now we all get to see how it plays out.

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