Global House Prices Rising at Fastest Pace in 15 Years
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Global House Prices Rising at Fastest Pace in 15 Years

13 countries and territories registered double-digit growth in the first quarter.

By Fang Block
Thu, Jun 3, 2021 1:19pmGrey Clock 2 min

A boom in housing demand during the global pandemic has driven price growth to a 15-year high, according to a report released Wednesday.

The Knight Frank’s Global House Price Index, measuring average home prices across 56 countries and territories, rose 7.3% year over year in the first quarter, the fastest pace since the fourth quarter of 2006.

“A contributory factor to rising house prices globally has been the mass reassessment of housing needs in the wake of the pandemic, whether that’s been buyers seeking home offices, gardens or just to be closer to wide-open spaces,” Kate Everett-Allen, head of international residential research at Knight Frank, told Mansion Global.

“The demands on the home have increased in lockdowns and homeowners have reflected on where and how they want to live, prompting many to relocate or purchase a second home,” she added.

With a 32% year-over-year price increase, Turkey led the rankings for the fifth consecutive quarter. However, stripping out inflation, real house prices rose around 16% annually in the country.

“Turkey’s somewhat of a red herring,” Ms. Everett-Allen said. “Sales declined in 2020 but prices increased due to inflation and the weak Turkish lira. Construction costs are also rising due to tight supply chains.”

A total of 13 countries, primarily developed nations, registered double-digit annual price growth. Those include New Zealand (22%), the U.S. (13%), Sweden (13%), Austria (12%), Canada (10.8%) and the U.K. (10.2%).

“Homeowners in these developed nations have also seen some of the largest rates of accrued savings. For some, this may mean they now have a deposit for their first home, or enable existing homeowners to upgrade,” Ms. Everett-Allen said.

For example, the Bank of England estimates that U.K. householders have amassed some £250 billion (US$354 billion) in savings since the start of the pandemic, she said.

Wary of potential housing bubbles, some countries have adopted market-cooling measures to curb the rapid price growth since January. China, New Zealand and Ireland introduced higher stamp duties for investment properties.

China is also considering a national vacancy tax or property tax, as is Canada.

Home prices in China, excluding Hong Kong, rose 4.3% year over year in the first quarter, while Ireland home prices increased 3.7% during the same period.

However, not all countries experienced a housing boom in the first quarter. Four countries saw their housing prices drop from a year ago, including Malaysia (-0.9%), Morocco (-1.2%), India (-1.6%) and Spain (-1.8%), according to the report.

Reprinted by permission of Mansion Global. Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: June 2, 2021



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Home prices declined at a faster pace in May in major cities, while other data show a mixed picture for the world’s second-largest economy

By REBECCA FENG
Tue, Jun 18, 2024 3 min

China’s broken housing market isn’t responding to some of the country’s boldest stimulus measures to date—at least not yet.

The Chinese government has been stepping up support for housing and other industries in recent months as it tries to revitalize an economy that has  continued to disappoint  since the early days of the pandemic.

But fresh data for May showed that businesses and consumers remain cautious. Home prices continue to fall at an accelerating rate, and fixed-asset investment and industrial production, while growing, lost some momentum.

“China’s May economic data suggest that policymakers have a lot to do to sustain the fragile recovery,” Yao Wei, chief China economist at Société Générale, wrote in a client note on Monday.

The worst pain is in the property sector, which has been struggling to deal with oversupply and weak buyer sentiment since 2021, when a multiyear  housing boom ended . The market still doesn’t appear to have found a floor, even after Beijing rolled out its most aggressive stimulus measures so far  in mid-May  in hopes of restoring confidence.

In major cities, new-home prices fell 4.3% in May compared with a year earlier, worse than a   3.5% decline in April, according to data released Monday by China’s National Bureau of Statistics. Prices in China’s secondhand home market tumbled 7.5%, compared with a 6.8% drop in April.

Home sales by value tumbled 30.5% in the first five months of this year compared with the same months last year.

“This data was certainly on the disappointing side and may ring some alarm bells, as May’s policy support package has not yet translated to a slower decline of housing prices, let alone a stabilisation,” said Lynn Song, chief China economist at ING.

Economists had also been hoping to see a wider recovery this month after Beijing started  rolling out  a planned issuance of 1 trillion yuan, the equivalent of $138 billion, in ultra-long sovereign bonds in May. The funds are designed to help pay for infrastructure and property projects backed by the authorities. Investors  gobbled up  the first batch of these bonds.

Monday’s bundle of economic data, however, underlined how the country still isn’t firing on all cylinders.

Retail sales, a key metric of consumer spending, rose 3.7% in May from a year earlier, compared with 2.3% in April, according to the National Bureau of Statistics. While the trend is heading in the right direction, it is still a relatively subdued level of growth, and below what most economists believe is needed to kick-start a major revival in consumer spending.

The expansion in industrial production—5.6% in May compared with a year earlier—was down from April’s 6.7% increase. Fixed-asset investment growth, of which 40% came from property and infrastructure sectors, also decelerated, to 3.5% year-over-year growth in May from 3.6% in April.

Key to the sluggish economic activity data in May—and China’s outlook going forward—is the crisis in the property market, which has proven hard for policymakers to address.

The property rescue package in May included letting local governments buy up unsold homes, removing minimum interest rates on mortgages, and reducing payments for potential home buyers. It also included as its centerpiece a $41 billion so-called re-lending program launched by the People’s Bank of China, which would provide funding to Chinese banks to support home purchases by state-owned firms.

The hope was that by stepping in as a buyer of last resort for millions of properties, the government would manage to mop up unsold housing inventory and persuade wary home buyers to re-enter the market. In turn, Chinese consumers, who have  most of their wealth  tied up in real estate, would feel more confident about spending again, thereby lifting the overall economy.

But the size of the re-lending program wasn’t big enough to convince home buyers, said Larry Hu , chief China economist at Macquarie Group. “Meanwhile, their income outlook also stays weak given the current economic condition,” he said.

For the property market to bottom out and reach a new equilibrium, mortgage rates, which stand at around 3-4% in China, need to be as low as rental yields, which are currently below 2% in major cities, said Zhaopeng Xing, a senior China strategist at ANZ. He said that a large mortgage rate cut will need to happen eventually.

The other key part of China’s push to revive growth revolves around the manufacturing sector, with leaders  funnelling more investment  into factories to boost output and reduce the country’s reliance on foreign suppliers of key technologies.

The result has been a surge in production. But with domestic consumption not strong enough to absorb all those goods, many factories have been forced to cut prices and seek out more overseas buyers.

Data released earlier this month showed that  Chinese exports rose  faster in May than the month before.

However, the export push is  butting into resistance  as governments around the world worry about the impact of cheap Chinese competition on domestic jobs and industries. The European Union last week said it would  impose new import tariffs  on Chinese electric vehicles, describing China’s auto industry as heavily subsidised by the government, to the point where other countries’ automakers can’t fairly compete.

The U.S.  has also hit  Chinese cars and some other products with hefty duties, while countries including Brazil, India and Turkey have opened antidumping investigations into Chinese steel, chemicals and other goods.

Beijing says such moves are protectionist and that its industries compete fairly with global rivals.