Australasia is strongest-performing region in Knight Frank's Global House Price Index
Australia climbed to number four while New Zealand was at second place in the latest global house price index for the last quarter of 2015 compiled by property consultancy Knight Frank, even as global outlook for 2016 remained muted in contrast to the previous year.
The Global House Price Index monitors and compares the performance – rate of capital growth – of mainstream residential markets in 55 countries. The index rose by 3% in 2015, up from 2.3% in 2014. Concerns over the global economy in 2015 failed to dent buyer confidence; instead the lingering low interest rate environment influenced sentiment, it said.
The index, established in 2006, 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 on a Purchasing Power Parity basis and the latest quarter’s data is provisional pending the release of all the countries’ results.
It allows investors and developers to monitor and compare the performance of mainstream residential markets around the world.
Australasia was the strongest-performing global region in 2015 at 12.4%, buoyed by the strong performance of New Zealand and Australia, both of which saw annual price growth in excess of 10%, said Knight Frank’s director, Residential Research, Australia, Michelle Ciesielski.
“Australia was ranked number four on the Global House Price Index for the fourth quarter of 2015, up from seventh in the previous quarter, with an annual growth rate of 10.7%. Turkey led the Global House Price Index, with growth of 18.4%," said Ciesielski.
“New Zealand followed directly behind Turkey, with an annual price growth of 14.2% as of the fourth quarter of 2015, bringing it to second place from third in the previous quarter."
“Housing affordability, or the lack of it, is rising up policymakers’ agendas worldwide. According to the latest data from the OECD, which measures house prices against incomes for 24 of its 34 members, Belgium, New Zealand and Canada are currently the world’s least affordable markets, whilst home ownership is most accessible in South Korea and Japan."
Australia is ranked at four among the least affordable, at 29% over-valued relative to the long-term average held, according to the OECD.
“Our global outlook for 2016 is muted. We expect the index’s overall rate of growth to be weaker in 2016 than in 2015. The global economy is experiencing a potentially dangerous cocktail of low oil prices, a strong dollar and a continued slowdown in China,” said Kate Everett-Allen, partner, International Residential Research, Knight Frank.
Results for Q4 2015
* Forty-three of the 55 housing markets tracked in our Global House Price Index saw prices rise, up from 10 countries in the aftermath of the Lehman’s collapse in September 2008 (please see Figure 1 which compares the shift in global house prices starting from Q2 2008, the latest global house price index available at the time of Lehman’s collapse).
* Turkey leads the rankings with prices rising 18% during 2015. Increasingly viewed as a safe haven for Middle Eastern investors, Turkey is bridging East and West whilst also seeing strong population growth.
* Belgium and New Zealand are the least affordable countries when house prices are compared to incomes.
* Ukraine and Greece were the weakest housing markets in 2015, recording price falls of 12% and 5% respectively.
“2015 saw Asian mainstream residential markets record only 1.9% annual price growth, lower than the global average of 3%. While a number of markets experienced positive growth, Taiwan and Singapore, which have seen negative growth for a number of quarters, were joined by Hong Kong this quarter, which saw its residential market decline by 3.7% in Q4 2015," said Nicholas Holt, head of Research for Asia Pacific.
“While long-term growth prospects remain positive, the continued economic uncertainty in the region is likely to weigh on housing market sentiment in the near term.”
Added Everett-Allen, “Although house prices in Hong Kong increased in 2015, the rate of growth has slowed significantly from 17% in the year to September to 7% in the year to December 2015. The slower rate of growth is attributable to rising supply (more than 11,200 homes were completed in 2015), as well as China’s financial market volatility and the expectation of increasing interest rates.”
Data from China’s National Bureau of Statistics showed house prices rose marginally in 2015 (0.4%), having reached their peak in the first quarter of 2014. Cities such as Shenzhen and Shanghai continue to outperform the national average due in part to favourable government policies and strong demand in first-tier cities.