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SG Dubai leads the world in price growth

Property Here - Monday, December 16, 2013

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Dubai, with a 28.5 percent rise in house prices in the 12-month period ending September 2013, lead the world according to the Knight Frank Global House Price Index.

The report, which ranks house prices in 53 countries around the world, placed China (Beijing and Shanghai with a 21.6 percent rise) in second place and property in Hong Kong (16.1 percent) third.

Property prices in Indonesia – at 13.5 percent – was ranked as the fifth fastest-growing market by the report, with Malaysia’s 10.2 percent placing it in 12th spot. Singapore, which showed an increase of 4.6 percent excluding non-landed property, came in 23rd place globally.

Knight Frank’s Kate Everett- Allen analysed the latest results.

She said: “The index now stands four percent above its previous peak in Q2 2008, and 12.7 percent above its financial crisis low in Q2 2009. Prices rose on average by 1.5 percent in the third quarter, taking annual price growth to 4.6 percent.”

She added the rise suggests that the world’s housing markets are gaining traction.

“More than 69 percent of the countries tracked by the index recorded positive price growth in the year to September; two years earlier this figure was closer to 55 percent.”

“The index’s strong performance has been assisted not just by headline grabbing price rises in Dubai, China and Hong Kong, but also in a number of emerging markets,” she said.

“Taiwan, Indonesia, Turkey and Brazil recorded price growths of 15.4 percent, 13.5 percent, 12.5 percent and 11.9 percent respectively in the year to September.”

The report noted that while Dubai’s rebound has been impressive, so too has that of Ireland. In the latest results, Ireland ranks fifth in terms of quarterly price growth, with prices rising four percent on average over the three month period. Less than two years ago prices were falling at a rate of 5.4 percent each quarter.

During the global financial crisis, Asian housing markets largely compensated for the weakness of Europe and the U.S. With the U.K. and U.S. housing markets now picking up, the Eurozone debt crisis receding (at least for the moment) and prices in many key Asian markets still recording double digit annual price growth, the index is experiencing a strong surge.

That said, according to Knight Frank, there remains a number of struggling housing markets. There are still 17 countries where house prices fell in the year to September; all except three were located in Europe. Only Japan, South Korea and New Zealand interrupt Europe’s dominance at the foot of the table.

Risks to the world’s housing markets are numerous – from geo-political concerns to slowing growth rates in key emerging markets – but perhaps the most significant at present is a reduction in policy stimulus by the U.S. Federal Reserve.