Globally property prices in key locations increased by 6.5 per cent in the 12 months to March 2017, the highest rate of growth for three years, according the latest index.
Overall, 11 countries out of 55 recorded double digit price growth in the year compared to only four a year earlier, the figures from the Knight Frank global house price index shows.
According to Propertywire.com, Iceland led the index, recording average price growth of 17.8 per cent in the year to March 2017 while price growth in China slipped marginally to 10.3 per cent per annum with more than 45 cities having implemented home purchase restrictions.
Ahead of their 2017 elections France and the Netherlands saw price growth increase while in South Korea, the UK and Germany price growth slowed.
The data also shows that it is not simply that more countries are recording positive growth although that has played a part. While 43 countries recorded price rises in the first quarter of 2016, this has now risen to 48.
This rise has been accompanied by a concomitant increase in the number of countries seeing double digit annual growth rates. Kate Everett-Allen, head of international residential research Knight Frank, explained that given the uncertain global political landscape, the ramping up of cooling measures in large parts of Asia and the unravelling of stimulus measures such as QE in some parts of the world, growth is helped by economic growth.
She pointed out that the International Monetary Fund forecast global GDP to rise by 3.5 per cent in 2017 up from 3.1 per cent in 2016 and property’s reputation as a safe haven investment is also adding property price growth along with the greater availability of mortgage finance in developing markets.
Iceland, which leads the rankings for the second consecutive quarter, is heating up with average house prices rising by 17.8 per cent year on year with a dearth of new supply behind the accelerating prices. Iceland’s Housing Financing Fund suggests 9,000 new apartments need to be delivered over the next three years in Reykjavik alone to keep pace with demand.
Although China has slipped from seventh to tenth in the annual rankings this equates to a marginal fall from 10.8 per cent last quarter to 10.3 per cent this quarter.
“Despite various property market cooling measures, including home purchase restrictions and increased down payment ratios, residential prices continued to rise,” said Everett-Allen.
In Europe prices are up 12.6 per cent in Malta, up 11 per cent in the Czech Republic, up 10.7 per cent in Estonia and up by 10.5 per cent in Hungary. The report says that economic expansion and the Individual Investor Programme explain Malta’s rise, whilst historically low interest rates, wage increases and rising foreign interest are strengthening demand in the remaining three.
With the UK facing political uncertainty, the data suggests property prices continue to ease with annual growth reaching 4.1 per cent in the year to March, down from 5.3 per cent a year earlier. A brief look at some of the key elections in 2017 shows France and the Netherlands stand out as two key countries where price growth strengthened ahead of their polls.
Originally published in Punch Newspaper