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The global housing boom appears now to be losing momentum, with most of the Middle East, Latin America, and some parts of Asia experiencing either house price falls or a rapid deceleration of house price rises. 

Europe, Hong Kong, China and Canada continue to experience strong price rises, however.

The five strongest housing markets in our global house price survey for the first quarter of 2017 were: Hong Kong (+17.27%), Iceland (+16.01%), China (+13.16%), Canada (+11.7%), and Ireland (+8.91%). 

During the first quarter of 2017 house prices rose in 27 out of the 45 world’s housing markets which have so far published housing statistics, using inflation-adjusted figures. The more upbeat nominal figures, more familiar to the public, showed house price rises in 34 countries, and declines in 11 countries.

The biggest y-o-y house-price declines were in Egypt (-16.68%), Qatar (-10.63%), Russia (-8.33%), Macedonia (-7.92%), and Puerto Rico (-6.96%).

Momentum. During Q1 2017, only 18 of the world’s housing markets for which figures are available showed stronger upward momentum, while 27 housing markets showed weaker momentum, according to Global Property Guide’s research. Momentum is a measure of the “change in the change”; simply put, momentum has increased if a property market has risen faster this year than last (or fallen less). The momentum data show that most housing markets covered in our survey are now slowing.

Inflation-adjusted figures are used throughout this survey. In the case of Kiev, Ukraine, the Global Property Guide adjusts using the official U.S. inflation rate since Ukrainian secondary market dwelling sales are denominated in U.S. dollars.

Analysis by continent: Europe’s house price boom continues

European house price rises continue unabated. Six of the ten strongest housing markets in our global survey are in Europe. House prices have risen in 17 of the 23 European housing markets for which figures were available during the year to Q1 2017.

Iceland remains the strongest housing market in Europe and second best performer in our global survey, amidst spectacular economic growth. Nationwide house prices surged 16.01% y-o-y in Q1 2017, the highest increase since Q1 2006. This surge is attributable to strong demand, coupled with limited housing supply, especially in the capital city of Reykjavik. Quarter-on-quarter, house prices increased 4.57% during the latest quarter.

Ireland’s house prices continue to surge, fuelled by robust economic growth. Residential property prices were up by 8.91% during the year to Q1 2017. Quarter-on-quarter, Irish house prices rose 0.21% during the latest quarter.

Montenegro’s strong performance comes as a surprise, as it was the weakest housing market in our previous quarter’s global survey. The price of dwellings in new residential buildings soared 8.68% y-o-y in Q1 2017.

Romania’s housing market continues to perform well, with the average selling price of apartments rising by 7.61% during the year to Q1 2017. Quarter-on-quarter, Romanian house prices increased 4.21% during the latest quarter.

Norway’s nationwide house price index rose by 7.38% during the year to Q1 2017, the strongest rise since Q1 2010. Quarter-on-quarter, house prices increased 3.76% during the latest quarter.

The Netherlands’ housing market remains strong, despite modest economic growth. The average purchase price of all dwellings rose by 7.11% during the year to Q1 2017, the strongest rise in 16 years. Quarter-on-quarter, house prices increased 3.79% during the latest quarter.

Other strong European housing markets included Slovak Republic, with house prices rising by 6.61% during the year to Q1 2017, followed by Sweden (6.59%), Germany (5.79%), Riga,Latvia (5.13%), Tallinn, Estonia  (4.76%), Portugal (4.18%), and Vilnius, Lithuania (3.56%).

Somewhat weaker European housing markets included the UK with house prices rising by 1.84% y-o-y in Q1 2017, Istanbul, Turkey (1.84%), France (1.62%), and Spain (0.41%).

Europe’s weakest housing markets. Russia remains the weakest housing market in Europe and the third worst performer in our global survey, amidst a weak economy. Nationwide residential property prices in Russia plunged by 8.33% y-o-y in Q1 2017, though this was the smallest decline since Q4 2014. Russia’s house prices fell by 2.94% during the latest quarter.

Macedonia’s nationwide average dwelling price fell by 7.92% during the year to Q1 2017. House prices fell 3.51% during the latest quarter.

Ukraine’s housing market remains weak, even if the conflict with Russia officially ended in 2015. Kiev’s house prices fell by 5.05% during the year to Q1 2017, the fourteenth consecutive quarter of house price falls. House prices fell 2.41% during the latest quarter.

European countries with modest house price falls included Greece, with house prices falling by 3.13% during the year to Q1 2017, Switzerland (-1.69%), and Finland (-0.6%).

Asia: Hong Kong and China are among the best performers in our global house price survey

Hong Kong was the world’s strongest housing market during the year to Q1 2017, despite higher stamp duties for non-first time homebuyers. China’s housing market continues its upward march. The Philippines also had strong price rises, continuing the pattern of the past six years, amidst continuing economic growth. Japan, Vietnam, and Taiwan posted more modest house price rises.

Hong Kong’s housing market is now accelerating, despite the higher stamp duties for non-first time homebuyers introduced in November 2016. Residential property prices surged by 17.27% during the year to Q1 2017. House prices rose 3.93% during the latest quarter.

China continues to experience double-digit house price rises. In Shanghai the price index of second-hand houses rose by 13.16% during the year to Q1 2017, after y-o-y rises of 21.68% in Q4 2016, 24.86% in Q3 2016, 20.73% in Q2 2016, and 16.99% in Q1 2016. However, house prices in Shanghai fell by 0.95% during the latest quarter.

In the Philippines, the average price of 3-bedroom condominium units in Makati CBD rose by 7.04% during the year to Q1 2017. Housing prices rose 2.35% q-o-q during the latest quarter. Makati CBD property prices have soared more than 49% from Q1 2011 to Q4 2016, amidst rapid economic growth.

Japan’s housing market is slowing again, despite a weak economy. In Tokyo, the average price of existing condominiums rose by 2.93% during the year to Q1 2017. Quarter on quarter, residential property prices in Tokyo fell 0.81% during the latest quarter.

Vietnam‘s housing market remains sluggish, despite a booming economy and the recent introduction of the housing laws that allow foreigners and overseas Vietnamese to legally own, sell and transfer real properties. House prices rose by just 1.13% y-o-y in Q1 2017. Quarter-on-quarter, house prices fell 1.06% during the latest quarter.

Taiwan’s nationwide house prices rose by 0.69% during the year to Q1 2017, in contrast with a y-o-y decline of 7.65% a year earlier. Quarter-on-quarter, house prices increased 1.65% during the latest quarter.

Other Asian housing markets have lost steam. House prices fell in four of the ten Asian markets for which figures were available during the year to Q1 2017.

Singapore’s housing market is still weak. House prices fell by 3.45% during the year to Q1 2017, after a 2.35% y-o-y decline during the same period last year. House prices fell by 0.56% q-o-q during the latest quarter.

Thailand’s property market continues to lose steam. Nationwide house prices fell 1.37% during the year to Q1 2017, the second consecutive quarter of y-o-y decline. Quarter-on-quarter, house prices increased by 0.1% during the latest quarter.

In South Korea the nationwide housing purchase price index fell by 1.35% y-o-y in Q1 2017, in contrast to the rise of 1.81% a year earlier. House prices fell by 1.1% q-o-q during the latest quarter.

In Indonesia, residential prices in the country’s 14 largest cities fell by 0.98% during the year to Q1 2017, the ninth consecutive quarter of y-o-y declines. House prices fell 0.33% q-o-q during the latest quarter.

US house price rises moderating, Canadian house prices surging

The pace of price-rises in the U.S. housing market is slowing gradually, though homebuilder sentiment remains bullish. Canada meanwhile is in the middle of a house price boom.

The S&P/Case-Shiller seasonally-adjusted national home price index rose by 3.29% during the year to Q1 2017 (inflation-adjusted), the slowest pace since Q3 2014. House prices increased by only 0.17% during the latest quarter. The impression of a slowing pace of price rises was supported by Federal Housing Finance Agency’s seasonally-adjusted purchase-only U.S. house price index, which rose by 3.37% y-o-y in Q1 2017 (inflation-adjusted), down from 4.87% a year earlier. The index rose 0.6% q-o-q in Q1 2017.

Canada’s house prices are rising strongly, despite repeated market-cooling measures. House prices in the country’s eleven major cities surged by 11.7% during the year to Q1 2017, sharply up from a y-o-y rise of 5.67% the previous year, and the biggest annual increase since Q3 2006. House prices increased 1.15% q-o-q in Q1 2017.

Latin America’s housing markets continue to decelerate

Brazil’s housing market continues to struggle. In Sao Paulo, house prices fell by 3.75% during the year to Q1 2017. Quarter-on-quarter, house prices dropped 0.58% in Q1 2017, the ninth consecutive quarter of falling house prices.

Chile’s housing market is losing steam, amidst a slowing economy. The average price of new apartments in Greater Santiago fell by 0.37% y-o-y in Q1 2017, in sharp contrast with the annual rise of 6.75% the same period last year. However on a quarterly basis, house prices actually increased 4.72% in Q1 2017.

Mexico’s nationwide house price index rose by a meagre 0.17% during the year to Q1 2017, a sharp slowdown from the y-o-y rise of 5.26% the previous year. On a quarterly basis, house prices fell 2.24% in Q1 2017.

Middle Eastern housing markets are weak

Middle East has the two weakest housing markets in our global house price survey: Egypt and Qatar.

Egypt was the weakest housing market in our global survey, with the nationwide real estate index plunging by 16.68% during the year to Q1 2017, after an annual decline of 9.49% last year. Quarter-on-quarter, house prices fell 7.61% during the latest quarter.

Qatar’s housing market remains depressed, amidst an economic slowdown. The nationwide real estate price index fell by 10.63% during the year to Q1 2017, a sharp turnaround from the previous year’s rise of 9.36%. Property prices fell by 1.35% q-o-q during the latest quarter.

Dubai’s residential property prices fell 3.69% during the year to Q1 2017, an improvement from the price decline of 9.26% a year earlier. House prices fell 2.4% during the latest quarter.

Israel’s housing market is losing steam. The nationwide average price of owner-occupied dwellings fell by 0.54% y-o-y in Q1 2017, after rises of 5.24% in Q4 2016, 5.8% in Q3 2016, 5.31% in Q2 2016, and 6.23% in Q1 2016. House prices fell by 2.64% q-o-q in Q1 2017.

New Zealand remains very vibrant

New Zealand‘s house price rises have sharply accelerated, amid post-earthquake rebuilding. The nationwide median house prices rose by 7.26% during the year to Q1 2017, up from 3.63% the previous year. House prices rose by 4.11% q-o-q during Q1 2017.

Detailed country-by-country analysis: Europe

Six of the ten strongest housing markets in our global survey are in Europe. House prices rose in 17 of the 23 European housing markets for which figures were available during the year to Q1 2017.

Iceland remains the strongest housing market in Europe and second best performer in our global survey, amidst spectacular economic growth. Nationwide house prices surged 16.01% y-o-y in Q1 2017, the highest increase since Q1 2006. Quarter-on-quarter, house prices increased 4.57% during the latest quarter.

Iceland saw a housing boom from 2002 to 2007, with house prices surging by more than 73%. However house prices plunged by 32.5% from early-2008 to 2010, due to Iceland’s extreme exposure to the global crisis. The housing market was quiet during the next three years, with house prices rising a meagre 5%. Iceland then saw strong house price rises of 5.18% in 2014, 6.93% in 2015, and 12.53% during 2016, locally attributed to strong demand coupled with limited housing supply, especially in the capital city of Reykjavik.

Iceland’s economy grew by 7.2% in 2016, the highest level since 2007, according to the IMF. The economy is expected to expand by a robust 5.7% this year.

Ireland is considered by some to be Europe’s austerity star performer, having introduced structural reforms early in the crisis and is, according to this narrative, now reaping the benefits.

Residential property prices were up by 8.91% during the year to Q1 2017, after y-o-y rises of 8.15% in Q4 2016, 7.68% in Q3 2016, 4.57% in Q2 2016, and 5.84% in Q1 2016. On a quarterly basis, Irish house prices increased slightly by 0.21% in Q1 2017.

The Irish economy grew by a healthy 5.2% last year, after GDP growth of 26.3% in 2015 (obviously a statistical artefact), 8.5% in 2014, and 1.1% in 2013, according to the European Commission. Despite uncertainties related to Brexit and future US tax and trade policies, the economy is expected to remain firm this year with a projected GDP growth of 4%.

Montenegro’s house price rises come as a surprise, after emerging as the weakest housing market in our previous quarter’s global survey. The price of dwellings in new residential buildings soared 8.68% y-o-y in Q1 2017, in sharp contrast with annual declines of 12.67% in Q4 2016, 4.01% in Q3 2016, 9.47% in Q2 2016, and 3.17% in Q1 2016. Quarter-on-quarter, house prices surged by a huge 19.55% during the latest quarter.

Montenegro is experiencing a construction boom, particularly in the coastal areas of Budva and Becici, buoyed by strong tourism sector. Montenegro’s economy grew by a modest 2.5% last year, after expanding by 3.2% in 2015, 1.8% in 2014, and 3.5% in 2013. Economic growth is expected at 3.3% this year and 3.5% in 2018, according to the European Commission.

Romania‘s housing market continues to perform well. The average selling price of apartments rose 7.61% during the year to Q1 2017. Romanian house prices rose 4.21% q-o-q during the latest quarter.

Romania’s strong performance over the past two years is a rebound from previous dramatic falls. House prices plunged by 24.22% in 2009, 22.08% in 2010, 6.99% in 2011, 5.96% in 2012, 10.43% in 2013, and 1.59% in 2014. It was only in 2015 that the housing market began to recover, thanks to economic growth and a recovery in the construction sector. House prices surged by 7.74% in 2015 and by another 11.01% in 2016.

The Romanian economy expanded by a robust 4.8% in 2016, up from 3.9% growth in 2015, and almost zero growth between 2009 and 2014. Romania’s economy is expected to grow by a healthy 4.3% this year and by 3.7% in 2018, according to the European Commission.

Norway’s nationwide house price index rose by 7.38% during the year to Q1 2017, a sharp improvement from growth of 1.34% a year earlier, and the strongest rise since Q1 2010. Quarter-on-quarter, house prices rose 3.76% during the latest quarter. The strong housing market is mainly due to low interest rates, high population growth and several years of strong income growth, according to Statistics Norway.

However, due to falling petroleum prices, Norway’s economy grew by just 1% in 2016, a slowdown from 1.6% in 2015 and 1.9% in 2014. Economic growth is expected to be 1.2% this year, and 1.9% in 2018, according to the IMF.

The Netherlands’ housing market remains strong. The average purchase price of all dwellings rose by 7.11% during the year to Q1 2017, the strongest rise in 16 years. On a quarterly basis, house prices rose 3.79% in Q1 2017.

Demand is surging. During the first four months of 2017, there were 72,605 houses sold, an increase of more than one-fifth over the same period last year, according to Statistics Netherlands (CBS). The Dutch economy grew by 2.1% last year, after growing 2% in 2015 and 1.4% in 2014. It is expected to expand by another 2.1% this year and by 1.8% in 2018, according to the IMF.

Other strong European housing markets included Slovak Republic, with house prices rising by 6.61% during the year to Q1 2017, followed by Sweden (6.59%), Germany (5.79%), Riga,Latvia (5.13%), Tallinn, Estonia (4.76%), Portugal (4.18%), and Vilnius, Lithuania(3.56%).However, only Slovak Republic, Sweden and Germany saw positive quarterly growth during the latest quarter. All, except Sweden, Germany and Lithuania, saw bigger price rises in Q1 2017 compared to a year earlier.

European housing markets with smaller house price rises included the UK with house prices rising by 1.84% y-o-y in Q1 2017, Istanbul, Turkey (1.84%), France (1.62%), and Spain(0.41%). Only Spain and France recorded positive quarterly growth during the latest quarter. Moreover, only France saw bigger price increases in Q1 2017 compared to a year earlier.

Some European housing markets continue to struggle

Russia remains the weakest housing market in Europe and the third worst performer in our global survey. Nationwide residential property prices plunged by 8.33% y-o-y in Q1 2017, the smallest decline since Q4 2014. Russia’s house prices fell by 2.94% during the latest quarter.

After a period of soaring consumer prices, inflation in Russia has somewhat stabilized, thanks to prudent monetary policies. In April 2017, headline inflation slowed to 4.1%, the lowest level in almost five years, according to the Federal State Statistics Service. The overall inflation rate fell to 7% in 2016, after surging by 15.5% in 2015. Russia’s high inflation rate is the reason for the substantial difference between the nominal y-o-y decline in Russian house prices (-4.13%) and the real decline (-8.33%). However this year, inflation is expected to slow to about 4%.

From the perspective of foreigners the decline in the value of Russian property has been much greater. The ruble has lost almost 61% of its value against the US dollar in just three years, from an exchange rate of RUB30.231= US$1 in January 2013, to RUB77.175 in January 2016. However over the past 16 months, the ruble recovered 35% to reach RUB57.105 = USD1 in May 2017.

Russia’s economy grew by 0.3% year-on-year in Q4 2016 and by 0.5% in Q1 2017, after seven consecutive quarters of y-o-y declines. But in April 2017, crude oil prices stood at US$52.31 per barrel, still 53.2% down from US$111.8 per barrel in June 2014. Interest rates are high. The Russian government expects 0.6% growth this year, but the IMF gives a more optimistic figure of a 1.4% expansion.

In Macedonia the nationwide average price of dwellings fell by 7.92% during the year to Q1 2017, in sharp contrast with the y-o-y rise of 3.28% the previous year. House prices fell 3.51% during the latest quarter. Macedonia’s economy expanded by 2.4% in 2016, from 3.8% in 2015, 3.6% in 2014, and 2.9% in 2013. Economic growth is projected at 3.2% this year and 3.4% in 2018, according to the IMF.

Ukraine’s housing market remains weak, even though the conflict with Russia officially ended in 2015. House prices in Kiev fell by 5.05% during the year to Q1 2017, the fourteenth consecutive quarter of house price falls. House prices fell 2.41% quarter-on-quarter in Q1 2017. Ukraine’s economy grew by 2.3% last year, after declines of 9.8% in 2015, 6.6% in 2014 and 0.03% in 2013. The economy is expected to expand by 2% this year and by another 3.2% in 2018, according to the IMF.

European countries with modest house price falls included Greece, with house prices falling by 3.13% during the year to Q1 2017, Switzerland (-1.69%), and Finland (-0.6%). All saw negative quarterly price changes (-1.62% for Switzerland, -0.45% for Greece and -0.26% for Finland). All, except Greece, performed worse in Q1 2017 compared to a year earlier.

Detailed country-by-country analysis: Asia

Asian housing markets are now two-tiered, with Hong Kong, China and the Philippines’ property markets rising strongly.

Hong Kong‘s housing market is now the best performer in our global house price survey, with residential property prices surging by 17.27% during the year to Q1 2017. This was in sharp contrast with the y-o-y decline of 9.51% during the same period last year. Quarter-on-quarter, house prices increased 3.93% in Q1 2017. The latest house price rises come despite the government raising stamp duties for all non-first time homebuyers starting November 2016.

Demand is surging. The total number of property transactions in Hong Kong increased 2.1 times to 13,221 units in Q1 2017 from the same period last year whiles sales values increased 2.6 times to HK$114.27 billion (US$14.67 billion) over the same period, according to the Ratings and Valuation Department (RVD). Housing demand has been propelled by a combination of stringent government regulations on development, low interest rates, and currency stability; while the supply of land, which the government controls, continues to diminish.

Hong Kong’s economy grew by 4.3% in Q1 2017 from a year earlier, stronger than the 3.2% expansion in Q4 2016 and the fastest pace since 2011. The economy is projected to expand by 2% to 3%, after growth of 1.9% in 2016, 2.4% in 2015, 2.8% in 2014, 3.1% in 2013, and 1.7% in 2012, according to the Census and Statistics Department.

China continues to record double-digit house price rises, after measures to support the housing market were earlier introduced by the government. In Shanghai the price index of second-hand houses rose by 13.16% during the year to Q1 2017, after y-o-y rises of 21.68% in Q4 2016, 24.86% in Q3 2016, 20.73% in Q2 2016, and 16.99% in Q1 2016. However during the latest quarter, house prices in Shanghai fell slightly by 0.95%.

Demand continues to soar. After surging by more than 36% in 2016, the value of new homes sold nationally rose again by 23% y-o-y to RMB912 billion (US$132 billion) during the first two months of 2017, according to the National Bureau of Statistics. New housing starts, an indicator of developers’ confidence in the housing market, were up 10.4% y-o-y nationally in the first two months of the year, after an 8.1% annual gain in 2016. However, real estate experts warn that housing starts need to be restrained to absorb the country’s overhang of unsold properties. To cool the housing market, in September 2016 the government raised the minimum downpayment threshold for non-locals, and stopped property companies issuing domestic bonds.

The Chinese economy grew by 6.7% during 2016, its slowest growth for 26 years, despite a string of government stimulus measures to shore up demand. Then in Q1 2017, the economy expanded by 6.9% from a year earlier, the highest level since 2015. The Chinese government has a GDP growth target of 6.5% this year. The central bank kept its benchmark one-year lending rate at 4.35% in May 2017, after cutting it five times in 2015.

In the Philippines, the average price of 3-bedroom condominium units in Makati CBD rose by 7.04% during the year to Q1 2017, after y-o-y increases of 7.16% in Q4 2016, 7.56% in Q3 2016, 7.94% in Q2 2016, and 8.75% in Q1 2016. Housing prices increased 2.35% during the latest quarter. Makati CBD property prices have soared more than 49% from Q1 2011 to Q4 2016, amidst rapid economic growth.

The Philippine economy is in the 6th year of strong growth, growing by 6.4% y-o-y in Q1 2017, after expanding by 6.6% y-o-y in Q4 2016, 7% in both Q2 and Q3 2016, and 6.9% in Q1 2016. The economy is projected to expand by 6.8% this year, from 6.8% in 2016, 5.9% in 2015, 6.2% in 2014, 7.1% in 2013, and 6.7% in 2012, according to the IMF.

Japan’s housing market is slowing. In Tokyo, the average price of existing condominiums rose by 2.93% during the year to Q1 2017, a slowdown from y-o-y rises of 9.32% in Q4 2016, 6.56% in Q3 2016, 5.7% in Q2 2016, and 5.45% in Q1 2016. Residential property prices in the capital city fell 0.81% during the latest quarter.

Demand continues to rise. Existing condominium sales in Tokyo rose by 3.7% y-o-y in March 2017, according to The Land Institute of Japan. Likewise, sales of existing detached houses in Tokyo increased 5.5% over the same period. In Q1 2017, the Japanese economy grew by 1.6% year-over-year, up from a meagre growth of 0.5% a year earlier. The world’s third largest economy is expected to grow by 1.5% for fiscal year 2017, after y-o-y growth of 1% in 2016, 1.2% in 2015, 0.3% in 2014, 2% in 2013, and 1.5% in 2012, according to the Bank of Japan.

From a US$-based investor’s perspective, the Japanese residential market’s gains was bolstered by the 10.2% appreciation of the Japanese Yen from ¥123.725 = US$1 in June 2015, to ¥112.257 = US$1 in May 2017. However, this was not enough to offset the 37% drop in the value of yen against the dollar from 2012 to 2015.

Vietnam‘s housing market remains sluggish, despite a booming economy and the recent introduction of laws allowing foreigners and overseas Vietnamese to legally own, sell and transfer real properties. House prices rose by just 1.13% y-o-y in Q1 2017 after annual rises of 2.89% in Q4 2016, 4.39% in Q3 2016, 3.58% in Q2 2016 and 1.93% in Q1 2016. Quarter-on-quarter, house prices actually fell 1.06% during the latest quarter.

The Vietnamese economy expanded by 5.1% in Q1 2017 from a year earlier, down from a full-year growth of 6.21% in 2016 and the annual average growth of 6.5% from 2000 to 2015. The IMF expects slightly lower growth this year, of 6.5%.

In Taiwan nationwide house prices rose slightly by 0.69% during the year to Q1 2017, in contrast with a y-o-y decline of 7.65% last year. Quarter-on-quarter, house prices increased 1.65% in Q1 2017.

House prices had been falling over the past two years, after dramatic government measures to curb speculative house purchases. Property transactions in Taiwan fell by 16.1% in 2016, the lowest level since 2001, according to the Ministry of Interior.

Taiwan’s economy grew by 2.6% y-o-y in Q1 2017, according to the Directorate-General of Budget, Accounting and Statistics (DGBAS). The economy is expected to expand by 2.05% this year, after GDP growth rates of 1.5% 2016, 0.65% in 2015, 3.9% in 2014, 2.2% in 2013, 2.1% in 2012, 3.8% in 2011, and 10.6% in 2010.

Some Asian housing markets saw falling prices.

House prices fell in four of the ten Asian markets for which figures were available during Q1 2017.

Singapore‘s housing market is still weak. House prices fell by 3.45% during the year to Q1 2017, after a 2.35% y-o-y decline during the same period last year. House prices fell by 0.56% q-o-q during the latest quarter.

Despite this, demand is now rising strongly. New private residential units sold more than doubled in Q1 2017 from a year earlier, to 2,962 units, according to the Urban Redevelopment Authority. Supply is also soaring however, and the number of private residential units launched also doubled to 1,949 units.

Singapore’s economy expanded by a modest 2.5% in Q1 2017 from a year earlier, according to the Ministry of Trade and Industry. The economy is expected to grow by 2.2% this year, after expanding by 2% in 2016, 1.9% in 2015, 3.6% in 2014, 5% in 2013, 3.9% in 2012, 6.2% in 2011, and 15.2% in 2010, according to the IMF.

Thailand‘s property market continues to lose steam. Nationwide house prices fell 1.37% during the year to Q1 2017. House prices increased slightly by 0.1% q-o-q in Q1 2017.

Thailand’s economy expanded by 3.3% y-o-y in Q1 2017, mainly due to improving farm sector, recovering exports, and increasing private consumption. Economic growth is projected at 3% this year and 3.3% in 2018, according to the IMF.

South Korea‘s housing market is also fragile, with the nationwide housing purchase price index falling slightly by 1.35% y-o-y in Q1 2017, in contrast to the rise of 1.81% a year earlier. House prices fell by 1.1% q-o-q during the latest quarter.

Korea’s economy grew by 2.9% in Q1 2017 from a year earlier, up from the previous quarter’s 2.4% growth, according to the Bank of Korea. The economy is expected to expand by 2.7% this year, below the country’s average growth of 3.5% in the past seven years.

In Indonesia, residential prices in the country’s 14 largest cities fell by 0.98% during the year to Q1 2017, the ninth consecutive quarter of y-o-y declines. House prices fell 0.33% q-o-q during the latest quarter.

Demand continues to weaken sharply and total supply growth is expected to slow in the coming years. Yet Indonesia’s economy is expected to grow by 5.1% this year, after expansions of 5.02% in 2016, 4.88% in 2015, 5% in 2014, 5.6% in 2013, 6% in 2012, and 6.2% in 2011.

Detailed country-by-country analysis: Americas 

U.S. house price rises moderating, but sentiment remains bullish

The S&P/Case-Shiller seasonally-adjusted national home price index rose by 3.29% during the year to Q1 2017 (inflation-adjusted), the slowest pace since Q3 2014. House prices increased by 0.17% during the latest quarter. This was supported by Federal Housing Finance Agency’s seasonally-adjusted purchase-only U.S. house price index, which rose by 3.37% y-o-y in Q1 2017 (inflation-adjusted), down from an increase of 4.87% in a year earlier. The index increased 0.6% q-o-q in Q1 2017.

House prices continue to rise in all 20 major U.S. cities, according to the Case-Shiller index, with Seattle registering the biggest inflation-adjusted increase of 9.6% during the year to Q1 2017, followed by Portland (6.6%), Dallas (6%), Denver (5.8%), Boston (5.2%), Detroit (4.4%), Charlotte (4.2%), Minneapolis (4.1%), and Las Vegas (4%).

New York saw the lowest growth in inflation-adjusted house prices at 1.6%.

The U.S. economy grew by just 1.6% in 2016, its slowest growth since 2011, according to the U.S. Department of Commerce. The economic slowdown continues this year, with real GDP increasing by an annual rate of just 1.2% in Q1 2017, down from 2.1% in Q4 2016, 3.5% in Q3 2016 and 1.4% in Q2 2016. The world’s biggest economy is expected to expand by a meagre 1.6% this year, as consumer and business spending barely increases and as the government cut back on defense spending.

Residential construction activity remains strong. New privately-owned housing units authorized rose by 5.4% y-o-y in April 2017, according to the U.S. Census Bureau. Over the same period, the total number of housing starts increased slightly by 0.7%, while completions rose sharply, by 15.1%.

Demand is now stabilizing. New house sales were up by just 0.5% y-o-y, according to the U.S. Census Bureau.

U.S. homebuilders remain bullish, given the shortage of existing homes for sale, coupled with the Trump administration’s promise to cut regulation and make it easier to purchase and build a home. U.S. homebuilder sentiment stood at 70 in May 2017, up from 68 in the previous month and 58 in the same month last year, according to the National Association of Home Builders. A reading of 50 is the midpoint between positive and negative sentiments.

Canada’s house prices continue to surge

House prices in Canada‘s eleven major cities surged by 11.7% during the year to Q1 2017, despite repeated market-cooling measures, sharply up from a y-o-y rise of 5.67% in the previous year and the biggest annual increase since Q3 2006. House prices increased 1.15% q-o-q in Q1 2017.

Biggest rises: Toronto saw the biggest inflation-adjusted house price increases of 22.9% y-o-y in Q1 2017, followed by Hamilton (19.7%), Victoria (16.2%), and Vancouver (10.5%). Modest to minimal house price rises were recorded in Ottawa (3.7%), Halifax (2.5%), Montreal (1.9%) and Winnipeg (0.7%).

Biggest falls: Quebec recorded the biggest inflation-adjusted price drop of 4.31% during the year to Q1 2017, followed by Edmonton (-4.26%), and Calgary (-0.6%).

Home sales fell by 7.5% from a year earlier, according to the Canadian Real Estate Association (CREA), with declines in close to 70% all local markets, including the Lower Mainland of British Columbia and the Greater Toronto Area. There were about 4.2 months of inventory on a national basis April 2017, up slightly from 4.1 months the previous month, when it fell to its lowest level in almost a decade.

The Bank of Canada held its key interest rate unchanged at 0.50% in May 2017, amidst subdued inflationary pressures and the increased economic and political uncertainty associated with the U.S.’ potential policy changes. The key rate had previously been 1% from September 2010 to December 2014. The central bank will likely hold the key rate unchanged until the first quarter of 2018.

In Q1 2017, Canada’s economy grew at an annualized rate of 3.7%, up from growth of 2.8% during the same period last year, according to Statistics Canada. The economy is expected to grow by 1.9% this year, after expanding by 1.4% in 2016, 0.9% in 2015, 2.6% in 2014, 2.5% in 2013, and 1.7% in 2012, according to the IMF.

Detailed country-by-country analysis: South America’s downturn continues

Brazil. In Sao Paulo, house prices fell by 3.75% during the year to Q1 2017, after falling by 5.51% in Q4 2016, 7.71% in Q3 2016, 7.59% in Q2 2016, and 7.62% in Q1 2016. Quarter-on-quarter, house prices fell 0.58% in Q1 2017, the ninth consecutive quarter of falling house prices.

House prices in Sao Paulo soared by 113% (inflation-adjusted) from 2007 to 2013, while Rio De Janeiro’s rose by 144%. The crisis started in the first half 2013 when the central bank raised the benchmark interest rate nine times to 11% in April 2014, causing a sharp economic slowdown. It raised rates again by 25 basis points in October 2014, and by 50 basis points in December 2014, and then five times in 2015 to 14.25%, the highest level for almost six years. In May 2017, the central bank cut the key rate by 100 basis points to 10.25%, the sixth consecutive rate cut since October last year, in an effort to buoy the economy amidst slowing inflationary pressures.

Brazil’s economy has plunged into the country’s worst and longest recession in more than a century. It shrank by 3.6% in 2016, following a contraction of 3.8% in 2015 and a meagre growth of 0.2% in 2014, according to the IMF. Brazil’s 2017 growth projection has been cut by the IMF to just 0.2%. By December 2015, the Brazilian Real (BRL) had lost about 32% of its value against the U.S. dollar to reach an average monthly exchange rate of BRL3.8828 = USD1 as compared to BR2.6426 = USD1 in December 2014. However in the past 16 months, the real recovered by almost 24% to reach an exchange rate of BRL3.1390 = USD1 in April 2017.

The country faces immense political turmoil. Over the past nine months, President DilmaRousseff has been impeached following the massive Petrobras corruption scandal, the speaker of the house has been jailed, and five Cabinet ministers have been removed or allowed to step down because of allegations of corruption. Brazil’s new president, Michel Temer, is also embroiled in a corruption scandal, accused of exerting pressure to assist a top political ally in a property deal.

Unemployment was at record 13.6% in April 2017, with over 14 million jobless Brazilians, according to the country’s statistics agency, IBGE. In May 2017, Moody’s maintained Brazil’s sovereign rating to junk status and changed its outlook from stable to negative, in line with the other two major rating companies.

Chile’s housing market is now losing steam, amidst a slowing economy. The average price of new aprtments in Greater Santiago fell by 0.37% y-o-y in Q1 2017, the second consecutive quarter of y-o-y decline and in sharp contrast with the annual rise of 6.75% during the period last year. However, on a quarterly basis, house prices actually increased 4.72% in Q1 2017.

In 2016, VAT of 19% was imposed on sales of properties by “habitual sellers” such as real estate companies, and on legal or natural persons who purchase and sell their properties in a span of less than one year.

Chile’s economy grew by about 1.6% in 2016, the lowest growth since 2009 when the economy contracted by 1.6%, according to the IMF. The economy is expected to expand by 1.7% this year and by 2.3% in 2018.

Mexico’s housing market is cooling sharply. The nationwide house price index rose by a meagre 0.17% during the year to Q1 2017, a sharp slowdown from the y-o-y rise of 5.26% the previous year. On a quarterly basis, house prices actually fell 2.24% in Q1 2017.

From the perspective of foreign homebuyers the slowdown in property prices is greater, because of the peso’s sharp depreciation in recent months. In 2015, Mexico’s peso slumped against the US dollar by about 15%, the biggest annual decline since 2008. In May 2017, the peso had further depreciated by more than 9% from December 2015, to an exchange rate of MXN18.7674 = USD1.

The Mexican economy grew by 2.3% in 2016, after growth of 2.6% in 2015, 2.3% in 2014, 1.4% in 2013, 4% in both 2011 and 2012, and 5.1% in 2011, according to the InstitutoNacional de Estadistica y Geografia (INEGI). The economy is expected to expand between 1.5% and 2.5% this year.

Detailed country-by-country analysis: Middle East

Middle East has the two weakest housing markets in our global house price survey: Egypt and Qatar.

Egypt was the weakest housing market in our global survey, with the nationwide real estate index falling by 16.68% during the year to Q1 2017, worse than the annual decline of 9.49% recorded in a year earlier. Quarter-on-quarter, house prices fell 7.61% during the latest quarter.

In an effort to buoy the property market, President Abdel Fattah el-Sisi recently ratified Law 17/2015, removing the last remaining restrictions on foreign ownership of land and property in Egypt, and introduced rules allowing the government, the biggest landowner in Egypt, to contribute land to the private sector as part of public-private partnership schemes against a share of the revenue.

Egypt’s economy grew by 4.3% in 2016, the highest growth in 6 years, on the back of strong private consumption and investment in energy, real estate and infrastructure, according to BNP Paribas. The economy is expected to grow by 3.5% this year and by another 4.5% in 2018.

Qatar’s housing market remains depressed, amidst an economic slowdown. The nationwide real estate price index plunged by 10.63% during the year to Q1 2017, a sharp turnaround from the previous year’s rise of 9.36%. Property prices fell by 1.35% q-o-q during the latest quarter.

Despite this, demand is now rising again. In February 2017, real estate transactions rose by 47% to QAR2.2 billion (US$604 million), according to Ezdan Holding Group. In 2016, the total value of real estate transactions plunged by about 50%, after reaching an all-time high in 2015, boosted by a construction boom in preparation for the 2022 FIFA World Cup.

The Qatari economy grew by a modest 2.7% last year, after growing by an annual average of 4.2% during 2012-15, and 15.7% in 2008-11. The IMF expects the Qatari economy to expand by 3.4% this year and by another 2.8% in 2018. However these projections might be lowered as six Arab countries, including Saudi Arabia and Egypt, have just cut diplomatic ties with Qatar.

Dubai‘s residential property prices fell 3.69% during the year to Q1 2017, an improvement from the price decline of 9.26% a year earlier. House prices fell 2.4% during the latest quarter.

Dubai’s property market has been one of the world’s most volatile. Dubai saw one of the world’s worst housing crashes from Q3 2008 to Q3 2011 with house prices plunging by 53%. The market started to recover in 2012, with double-digit house price increases from Q2 2012 to Q4 2014. However, the property market began to slow in the second half of 2014, amidst housing oversupply, subdued demand and slower economic activity.

Demand is rising strongly again, another indication of improving housing market conditions. In Q1 2017, the value of real estate transactions soared by 45% y-o-y to AED77 billion (US$20.96 billion), according to the Dubai Land Department.

UAE’s economic growth slowed to 2.7% in 2016, after GDP growth of 3.8% in 2015, 3.1% in 2014, 4.7% in 2013, 7.1% in 2012 and 4.9% in 2011, according to the IMF. Abu Dhabi is projected to expand by 3.7% this year while Dubai will grow by 3.1%. For the country as a whole, UAE is expected to see a GDP growth between 3.5% and 4% this year, based on government estimates.

Israel‘s housing market is now losing steam, with the nationwide average price of owner-occupied dwellings falling slightly by 0.54% y-o-y in Q1 2017, after rises of 5.24% in Q4 2016, 5.8% in Q3 2016, 5.31% in Q2 2016, and 6.23% in Q1 2016. House prices fell by 2.64% q-o-q in Q1 2017.

Demand continues to fall. New dwellings sold fell by 17.6% y-o-y to 6,845 units in Q1 2017, according to the Central Bureau of Statistics (CBS). Dwelling starts dropped slightly by 0.7% y-o-y to 52,432 units in 2016 while dwelling completions increased by 4% to 45,404 units over the same period.

Israel’s economy grew by an annualized 1.4% in Q1 2017, the slowest pace in almost two years, amidst falling investment and consumer spending. The country’s economic growth is projected at 3%, after growing by 4% in 2016, 2.6% during both 2014 and 2015, 3.3% in 2013, 2.9% in 2012, and 5% in 2011. The Bank of Israel kept its benchmark interest rate at a record low of 0.1% in May 2017, in an effort to boost economic growth while maintaining price and financial stability.

Detailed country-by-country analysis: New Zealand accelerates

New Zealand’s house price rises are accelerating again, as post-earthquake rebuilding is bolstering the housing market. The nationwide median house prices rose by 7.26% during the year to Q1 2017, a sharp increase from growth of 3.63% the previous year. House prices rose by 4.11% q-o-q during Q1 2017.

However demand continues to fall, mainly due to the introduction of new lending restrictions in October last year, exacerbated by the impact of school holidays, Easter, ANZAC Day and an exceptionally wet April. Total dwellings sold were down 31% y-o-y to 5,845 units in April 2017, according to the Real Estate Institute of New Zealand (REINZ).

All regions recorded double-digit sales volume declines. Southland registered the biggest y-o-y drop of 50.4% in April 2017, followed by Waikato/Bay of Plenty (38.9%), Nelson/Marlborough (37.3%), Auckland (35.7%), and Otago (32.3%). The number of sales to sell eased by two days in April 2017 from a year earlier, according to REINZ. The decline in sales can also be attributed to shortage of housing inventory across the country, with 1,028 fewer houses for sale in April 2017 compared to the same period last year. Building consents for new homes fell by 10.8% to 2,106 units in April 2017 from a year earlier, according to Statistics New Zealand.

New Zealand’s economy grew by almost 4% in 2016, the highest growth since 2007. The economy is expected to expand by 3.1% this year and by another 2.9% in 2018, according to the IMF. The Reserve Bank of New Zealand (RBNZ) left the official cash rate (OCR) unchanged at a record low of 1.75% in May 2017, after cutting it by 25 basis points in the wake of Donald Trump’s unexpected US election win.

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