|
|
|
|
Moving outside of the UK, US and northern Europe in most parts of the world there is a serious lack of data to enable the assessment of market movements in many countries; even tracking basic data on house prices on a like for basis within the European Union can be very problematic.
Where possible the Knight Frank index relies on an official national statistical source or a well respected national financial institution, usually a large mortgage provider (as in the case of the UK where we adopt figures provided by the Nationwide Building Society). In some cases these sources of data are not available and we have had to rely on valuation assessments of market movements – effectively assessing the value of a basket of properties from quarter to quarter. In certain cases the researchers have had to relate their findings to capital cities as a proxy for the wider national market – this is the case for example for the three Baltic states; Lithuania, Latvia and Estonia.
Liam Bailey, Head of Knight Frank Residential Research, comments: -
"The most notable trend is that house price growth is continuing to slow across the globe. Many commentators have been concerned that the boom in prices which has been seen in many countries would end in tears. When price growth began to slow in Australia and the UK, in 2003 and 2004 the belief was that this was the beginning of a house price slowdown which would influence consumer confidence, spending and economic growth.
Close attention has been paid to the US market and to other European markets such as France and Ireland where price growth continued to expand last year. However in all of these markets price growth has begun to slow with annualised inflation lower in each compared to the same period last year. A stable slowdown appears to have taken place in the UK and Australia with both countries sitting well down the price growth league table."
Knight Frank says that new data for Latvia reveals huge growth in prices over the past two years, with prices for apartments in Riga and the surrounding area over 45% higher in a year. Why has this market performed so well it asks? A levelling up situation is affecting all markets in the former Eastern Bloc – especially those which have joined the EU in recent years. Wage inflation, growing prosperity and access to less constrained mortgage finance have all contributed to rapidly rising prices.
The same process has been seen in Bulgaria – with a classic combination of catch-up, speculation, second home interest and slow but sustained economic growth underpinning prices.
Higher prices in most parts of the globe are a result of lower finance costs and increased wealth following strong economic growth in recent years. Slower house price growth globally suggests that affordability constraints have been hit in more locations.
The Knight Frank forecast is that we will see continued slowing of average global house price growth over the rest of 2006 and into 2007. However this wider trend will mask regional hot-spots and investment opportunities. Knight Frank's favoured locations are: - · Germany – Europe’s largest economy, and the world’s largest exporter is still underperforming and we believe will see sustained growth from 2007 · Slovenia and Slovakia – the two countries with the best potential for further growth in Eastern Europe (not yet in the index but joining from next quarter with new data sets available) · Cyprus – has potential for growth over the medium term – once the VAT changes are implemented and settle down · Russia – effectively Moscow, has the potential for more growth and will rival eventually rival London as the most expensive world city within five years Data summary Knight Frank Global House Price Index - annualised house price growth and country rankings
Source: Knight Frank Residential Research
© Copyright 2007 by Finfacts.com |
