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Q2 2017: Europe's boom continues, but sharp slowdown in the Middle East, Latin America, New Zealand and some parts of Asia

Global Property Guide
Thu, 28-Sep-2017, 08:14
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The global housing boom appears now to be losing momentum, with most of the Middle East, Latin America, New Zealand and some parts of Asia experiencing either house price falls or a deceleration of house price rises.

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

The five strongest housing markets in our global house price survey for the second quarter of 2017 were: Iceland (+21.28%), Hong Kong (+19.27%), Ireland (+13.52%), Canada (+13.08%), and Romania (+8.87%).

During the second quarter of 2017 house prices rose in 28 out of the 43 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 33 countries, and declines in 10 countries.

The biggest y-o-y house-price declines were in Puerto Rico (-9.59%), Russia (-7.58%), Qatar (-6.25%), Macedonia (-5.99%), and Egypt (-5.32%).

Momentum. During Q2 2017, only 16 of the world's housing markets for which figures are available showed stronger upward momentum, while 26 housing markets showed weaker momentum, according to Global Property Guide's research. The U.S. showed mixed results, with the Case-Shiller index showing stronger momentum, in contrast to the FHFA's index's slightly weaker momentum in Q2 2017 from a year earlier. 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

House prices continue to rise in most of Europe but the momentum is weaker. Six of the ten strongest housing markets in our global survey are in Europe and house prices have risen in 18 of the 22 European housing markets for which figures were available during the year to Q2 2017. However, only 10 European housing markets showed stronger upward momentum during Q2 2017, while the 12 markets showed weaker momentum.

Iceland is now the strongest housing market in our global survey, amidst spectacular economic growth. Nationwide house prices surged 21.28% y-o-y in Q2 2017, sharply up from last year's 6.34% growth and the highest increase since Q4 2005. 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 5.76% during the latest quarter.

Ireland's house prices continue to surge, fuelled by robust economic growth.  Residential property prices were up by 13.52% during the year to Q2 2017, a sharp increase from last year's 4.57% rise. On a quarterly basis, Irish house prices increased 4.7% in Q2 2017.

Romania's housing market continues to perform well, with the average selling price of apartments rising by 8.87% during the year to Q2 2017. Quarter-on-quarter, Romanian house prices increased 1.95% during the latest quarter.

Sweden's housing market remains strong, despite the introduction of new amortization requirements in June 2016 that aim to curb speculative demand. The nationwide house price index surged 7.5% during the year to Q2 2017. House prices increased 2.34% q-o-q during the latest quarter.

The Netherlands' housing market continues to grow stronger, with the average purchase price of all dwellings rising by 7.44% during the year to Q2 2017, the strongest rise in more than 16 years. On a quarterly basis, house prices rose slightly by 0.68% in Q2 2017.

Other strong European housing markets included Germany, with house prices rising by 6.96% during the year to Q2 2017, followed by the Slovak Republic (6.02%), Norway (4.71%), Riga, Latvia (4.68%), Tallinn, Estonia (4.25%), and Portugal (3.47%).

Somewhat weaker European housing markets included Montenegro with house prices rising by 2.8% y-o-y in Q2 2017, Turkey (1.63%), Vilnius, Lithuania (1.48%), Switzerland (1.1%), Spain (0.85%), Finland (0.41%), and the UK (0.22%).

Europe's weakest housing markets. Russia remains the weakest housing market in Europe and the second worst performer in our global survey - but things are getting better. Nationwide residential property prices plunged by 7.58% y-o-y in Q2 2017, the smallest decline since Q4 2014. Russia's house prices fell by 1.44% during the latest quarter.

Macedonia's housing market is struggling, with the nationwide average price of dwellings falling by 5.99% during the year to Q2 2017, in contrast with the y-o-y rise of 0.84% the previous year. On a quarterly basis, house prices increased slightly by 0.13% during the latest quarter.

Ukraine's housing market remains depressed, even if the conflict with Russia officially ended in 2015. Kiev's house prices fell by 5.13% during the year to Q2 2017, the fifteenth consecutive quarter of house price falls. House prices fell 1.67% quarter-on-quarter in Q2 2017.

Greece's decade-long housing market bust is not yet over, with the average price of dwellings falling by 2.53% during the year to Q2 2017, worse than its 1.55% y-o-y price decline in Q1 2016. Quarter-on-quarter, house prices fell by 1.58% in Q2 2017. House prices have been falling in Athens since 2008.

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

Hong Kong was the world's second strongest housing market during the year to Q2 2017, despite higher stamp duties for non-first time homebuyers. The Philippines also had strong price rises, continuing the pattern of the past six years, amidst continuing economic growth. China, Japan, 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 19.27% during the year to Q2 2017, in sharp contrast with the y-o-y decline of 10.51% during the same period last year. House prices rose 4.24% during the latest quarter.

The Philippines' housing market continues to grow stronger, with the average price of 3-bedroom condominium units in Makati CBD rising by 8.45% during the year to Q2 2017, up from the previous year's 7.94% rise. Housing prices increased 2.81% during the latest quarter. Makati CBD property prices have soared more than 49% from Q1 2011 to Q4 2016, amidst rapid economic growth.

In China, house prices continue to rise, albeit at a much slower pace, as new regulatory and monetary tightening policies are starting to impact developers and speculative buyers. In Shanghai the price index of second-hand houses rose by 6.76% during the year to Q2 2017, a sharp slowdown from a y-o-y rise of 20.73% in Q2 2016. During the latest quarter, house prices in Shanghai increased slightly by 0.6%.

In Japan, the average price of existing condominiums in Tokyo rose by 3.54% during the year to Q2 2017, from y-o-y rises of 2.93% in Q1 2017, 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 increased 0.37% during the latest quarter.

Taiwan's housing market is now improving, amidst modest economic growth. The nationwide house prices rose slightly by 0.37% during the year to Q2 2017, in contrast with a y-o-y decline of 4.58% last year. Quarter-on-quarter, house prices increased 1.28% in Q2 2017.

Other Asian housing markets have lost steam. House prices fell in four of the nine Asian markets for which figures were available during the year to Q2 2017.

Singapore's housing market is still weak. House prices fell by 3.23% during the year to Q2 2017, after a 2.16% y-o-y decline during the same period last  year. It was the fifteenth consecutive quarter of house price falls. House prices fell by 0.19% q-o-q during the latest quarter.

Thailand's property market continues to lose steam. Nationwide house prices fell 2.8% during the year to Q2 2017, in contrast to a y-o-y rise of 4.29% the previous year. House prices increased slightly by 0.68% q-o-q in Q2 2017.

Indonesia's housing market remains sluggish, despite a booming economy. Residential prices in the country's 14 largest cities fell by 1.1% during the year to Q2 2017, the tenth consecutive quarter of y-o-y declines. House prices increased slightly by 0.5% q-o-q during the latest quarter.

South Korea's housing market is also fragile, with the nationwide housing purchase price index falling slightly by 0.67% y-o-y in Q2 2017, in contrast to the rise of 1.07% a year earlier. House prices rose by 0.67% q-o-q during the latest quarter.

U.S. house price rises remains steady, Canadian house prices surging

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

The S&P/Case-Shiller seasonally-adjusted national home price index rose by 4.07% during the year to Q2 2017 (inflation-adjusted), slightly up from a y-o-y rise of 3.86% in Q2 2016. House prices increased 2.62% 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 4.65% y-o-y in Q2 2017 (inflation-adjusted), from y-o-y rises of 3.72% in Q1 2017, 4.44% in Q4 2016, 5.11% in Q3 2016, and 4.81% in Q2 2016. The index increased 1.07% q-o-q in Q2 2017.

Canada's house prices are rising strongly, despite repeated market-cooling measures. House prices in the country's eleven major cities surged by 13.08% during the year to Q2 2017, 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 5.69% q-o-q in Q2 2017.

Latin America's housing markets remain weak

Brazil's house prices continue to fall, albeit at a slower pace, amidst gradually improving economic conditions. In Sao Paulo, house prices fell by 2.15% during the year to Q2 2017, an improvement from a y-o-y decline of 7.59% in Q2 2016. Quarter-on-quarter, house prices rose slightly by 0.05% in Q2 2017, the first quarterly increase after nine consecutive quarters of decline.

Chile's housing market remains weak, amidst a slowing economy. The average price of new apartments in Greater Santiago increased by 2.11% during the year to Q2 2017, from a y-o-y rise of 2.78% during the same period last year. House prices increased by 0.79% during the latest quarter (Q2 2017).

Mexico's housing market is cooling sharply. The nationwide house price index rose by a meagre 0.73% during the year to Q2 2017, a sharp slowdown from the y-o-y rise of 5.32% the previous year. However on a quarterly basis, house prices actually increased 3.02% in Q2 2017.

Middle Eastern housing markets have lost steam

House prices fell in all four Middle Eastern housing markets for which figures were available during the year to Q2 2017.

Qatar's housing market is very weak, amidst a sharp economic slowdown and the ongoing diplomatic crisis in the region. The nationwide real estate price index dropped 6.25% during the year to Q2 2017, a sharp turnaround from the previous year's rise of 1.75%. However property prices increased 1.1% q-o-q during the latest quarter.

Egypt remains weak, with the nationwide real estate index falling by 5.32% during the year to Q2 2017, an improvement from the annual decline of 11.2% a year earlier. House prices fell by 3.92% during the latest quarter.

Dubai's residential property prices fell 2.51% during the year to Q2 2017, an  improvement from the price decline of 6.96% a year earlier. But it was the tenth consecutive quarter of y-o-y house price falls. House prices fell by 0.06% during the latest quarter.

Israel's decade-long house price boom could now be over, as government cooling measures intensify. The nationwide average price of owner-occupied dwellings dropped 1.93% y-o-y in Q2 2017, a sharp turnaround from the annual rise of 5.31% in Q2 2016. House prices fell by 4.25% q-o-q in Q2 2017.

New Zealand slowing sharply

New Zealand's housing market is now slowing sharply, mainly due to new lending restrictions introduced in October last year, and worsening affordability. The nationwide median house prices rose by 3.99% during the year to Q2 2017, a sharp slowdown from y-o-y growth of 10.43% the previous year. House prices dropped 2.49% q-o-q during Q2 2017.

Puerto Rico remains depressed

Puerto Rico is unexpectedly now the weakest housing market in our global house price survey, amidst continued economic woes, high unemployment, massive emigration, and a near-catastrophic national debt crisis and credit rating downgrades. The seasonally-adjusted purchase-only house price index dropped 9.59% during the year to Q2 2017, in sharp contrast with the y-o-y rise of 3.26% a year earlier. House prices fell by 2.89% q-o-q in Q2 2017.




Detailed country-by-country analysis: Europe

House prices continue to rise in most of Europe but the momentum is considerably down. Six of the ten strongest housing markets in our global survey are in Europe and house prices have risen in 18 of the 22 European housing markets for which figures were available during the year to Q2 2017. However, only 10 European housing markets showed stronger upward momentum during Q2 2017, while the 12 markets showed weaker momentum.

Iceland is now the strongest housing market in our global survey, amidst spectacular economic growth. Nationwide house prices surged 21.28% y-o-y in Q2 2017, sharply up from last year's 6.34% growth and the highest increase since Q4 2005. Quarter-on-quarter, house prices increased 5.76% 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. After growing by 7.6% in Q1 2017, the economy is expected to expand by a robust 6% this year, fuelled by strong private consumption and gross fixed investment, according to Statistics Iceland.

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 13.52% during the year to Q2 2017, after y-o-y rises of 8.91% in Q1 2017, 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 4.7% in Q2 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 4.5%, according to the Central Bank of Ireland.

Romania's housing market continues to perform well. The average selling price of apartments rose strongly by 8.87% during the year to Q2 2017. Romanian house prices increased 1.95% 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.

Sweden's housing market remains strong, despite the introduction of new amortization requirements in June 2016 that aims to curb speculative demand. The nationwide house price index surged 7.5% during the year to Q2 2017, almost at par with the previous year's 8% growth. House prices increased 2.34% q-o-q during the latest quarter.

The number of home purchases increased 5.7% to 5,952 units in June 2017 from a year earlier, according to Statistics Sweden. Home sales fell by 6.19% in 2016, after rising by 5.93% in 2015, 6.71% in 2014 and 3.83% in 2013. Dwelling starts in newly constructed one- or two-dwelling buildings fell by 23.4% y-o-y in Q2 2017 while completions dropped 2.2%.

The Swedish economy is expected to grow by 2.6% this year and by 2.2% next year, a slowdown from annual growth rates of 3.3% in 2016 and 4.1% in 2015, according to the European Commission.

The Netherlands' housing market continues to grow stronger, with the average purchase price of all dwellings rising by 7.44% during the year to Q2 2017, the strongest rise in more than 16 years. On a quarterly basis, house prices rose slightly by 0.68% in Q2 2017.

Demand is surging. During the first seven months of 2017, there were 134,260 houses sold, an increase of nearly one-fifth over the same period last year, according to Statistics Netherlands (CBS). The Dutch economy grew by 2.2% 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 Germany, with house prices rising by 6.96% during the year to Q2 2017, followed by Slovak Republic (6.02%), Norway (4.71%), Riga, Latvia (4.68%), Tallinn, Estonia (4.25%), and Portugal (3.47%). All saw positive quarterly growth during the latest quarter. Moreover all, except Germany, saw bigger price rises in Q2 2017 compared to a year earlier.

European housing markets with smaller house price rises included Montenegro with house prices rising by 2.8% y-o-y in Q2 2017, Turkey (1.63%), Vilnius, Lithuania (1.48%), Switzerland (1.1%), Spain (0.85%), Finland (0.41%), and the UK (0.22%). All, except Montenegro, Lithuania, and Spain, recorded positive quarterly growth during the latest quarter. However, only Montenegro saw bigger price increases in Q2 2017 compared to a year earlier.

Some European housing markets continue to struggle

Russia remains the weakest housing market in Europe and the second worst performer in our global survey - but things are getting better. Nationwide residential property prices plunged by 7.58% y-o-y in Q2 2017, the smallest decline since Q4 2014. Russia's house prices fell by 1.44% during the latest quarter.

After a period of soaring consumer prices, inflation in Russia has somewhat stabilized, thanks to prudent monetary policies. In August 2017, headline inflation slowed to 3.3%, the lowest reading in the post-USSR era, according to the Federal State Statistics Service. The overall inflation rate fell to 7% in 2016, after surging by 15.5% in 2015. Inflation is expected to slow further to about 4% this year.

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 18 months, the ruble recovered almost 30% to reach  RUB59.409 = USD1 in August 2017.

Russia's economy is now improving significantly, with annual GDP growth of 2.5% in Q2 2017, an acceleration from miniscule growths of 0.5% in Q1 2017 and 0.3% in Q4 2016 and in stark contrast with seven consecutive quarters of y-o-y declines from Q1 2015 to Q3 2016. But in July 2017, crude oil prices stood at US$48.48 per barrel, still 56.6% down from US$111.8 per barrel in June 2014. The economy is expected to expand by 2.1% this year, after contractions of 0.2% in 2016 and 2.8% in 2015 and a meagre growth of 0.7% in 2014.

Macedonia's housing market continues to struggle, due in part to the country's extended political crisis, and the impact from problems in neighboring Greece. The nationwide average price of dwellings fell by 5.99% during the year to Q2 2017, in contrast with the y-o-y rise of 0.84% the previous year. It was the fourth consecutive quarter of annual price falls. On a quarterly basis, house prices increased slightly by 0.13% during the latest quarter.

Since the global crisis, Macedonia's housing market has never truly recovered. House prices fell by 3.6% in 2011, 3.1% in 2012, and 1.74% in 2013. House prices increased slightly by 1.19% in 2014 and 0.71% in 2015, but fell again by 0.91% in 2016. 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 depressed, even though the conflict with Russia officially ended in 2015 and the economy has already recovered. House prices in Kiev fell by 5.13% during the year to Q2 2017, the fifteenth consecutive quarter of house price falls. House prices fell 1.67% quarter-on-quarter in Q2 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.

Greece's decade-long housing market bust is not yet over, with the average price of dwellings falling by 2.53% during the year to Q2 2017, worse than its 1.55% price decline in Q1 2016. Quarter-on-quarter, house prices fell by 1.58% in Q2 2017. House prices have been falling in Athens since 2008.

The Greek economy barely grew last year, after a contraction of 0.2% in 2015, a meagre growth of 0.4% in 2014, and declines of 3.2% in 2013, 7.3% in 2012, 9.1% in 2011, 5.5% in 2010, 4.3% in 2009 and 0.3% in 2008. The economy is projected to expand this year by 2.1% and in 2018 by 2.5%, according to the European Commission.

Detailed country-by-country analysis: Asia

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

Hong Kong's housing market is the second best performer in our global house price survey, with residential property prices surging by 19.27% during the year to Q2 2017. This was in sharp contrast with the y-o-y decline of 10.51% during the same period last year. Quarter-on-quarter, house prices increased 4.24% in Q2 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. During the first seven months of 2017, the total number of property transactions in Hong Kong increased 47.4% to 35,628 units from the same period last year whiles sales values surged 80.8% to HK$329.8 billion (US$42.15 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 strongly by 3.8% in Q2 2017 from a year earlier, from y-o-y expansions of 4.3% in Q1 2017 and 3.2% in Q4 2016. The economy is now expected to expand by 3% to 4% this year, an upward revision from the earlier forecast of 2% to 3%, and up from growth rates 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.

The Philippines' housing market continues to grow stronger, with the average price of 3-bedroom condominium units in Makati CBD rising by 8.45% during the year to Q2 2017, after y-o-y increases of 7.04% in Q1 2017, 7.16% in Q4 2016, 7.56% in Q3 2016, and 7.94% in Q2 2016. Housing prices increased 2.81% 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 6.5% y-o-y in Q2 2017, after expanding by 6.4% in Q1 2017, 6.6% in Q4 2016, 7% in both Q2 and Q3 2016, and 6.9% in Q1 2016, according to the Philippine Statistics Authority. The economy is projected to expand between 6.5% and 7.5% this year, from 6.8% in 2016, 5.9% in 2015, 6.2% in 2014, 7.1% in 2013, and 6.7% in 2012, based on government estimates.

In China, house prices continue to rise, albeit at a much slower pace, as new regulatory and monetary tightening policies are starting to impact developers and speculative buyers. In Shanghai the price index of second-hand houses rose by 6.76% during the year to Q2 2017, a sharp slowdown from y-o-y rises of 13.16% in Q1 2017, 21.68% in Q4 2016, 24.86% in Q3 2016, 20.73% in Q2 2016, and 16.99% in Q1 2016. During the latest quarter, house prices in Shanghai increased slightly by 0.6%.

After surging by more than 36% in 2016, the value of new homes sold nationally rose by a modest 4.3% y-o-y to RMB779 billion (US$117 billion) in July 2017, according to the National Bureau of Statistics. The increase is the smallest since March 2015, when the housing market started to take off on policies to encourage demand. New housing starts, an indicator of developers' confidence in the housing market, fell by 7% y-o-y nationally in July 2017, after an 8.1% annual gain in 2016. 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. Since then, a series of other tightening measures were introduced in more than 45 Chinese cities, mostly top-tier cities, to curb speculative buying.

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. The economy expanded by an annualized rate of 6.9% for both the first and second quarters of 2017, the highest level since 2015 and well above the government's GDP growth target of 6.5% this year. The central bank kept its benchmark one-year lending rate at 4.35% in August 2017, after cutting it five times in 2015.

In Japan, the average price of existing condominiums in Tokyo rose by 3.54% during the year to Q2 2017, from y-o-y rises of 2.93% in Q1 2017, 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 increased 0.37% during the latest quarter.

Demand is mixed. Existing condominium sales in Tokyo rose by 2.24% y-o-y to 22,947 units in the first seven months of 2017, according to The Land Institute of Japan. On the other hand, sales of existing detached houses in Tokyo fell by 1.7% to 11,277 units over the same period. In Q2 2017, the Japanese economy grew by an annualized rate of 4%, the fastest pace in more than two years, buoyed by strong consumer spending and capital expenditure. The world's third largest economy is expected to grow by 1.8% for fiscal year 2017, an upward revision from the previous forecast of 1.6% growth and an improvement from y-o-y growth rates of 1% in 2016, 1.2% in 2015, and 0.3% in 2014, according to the Bank of Japan.

From a US$-based investor's perspective, the Japanese residential market's gains was bolstered by the 12.7% appreciation of the Japanese Yen from ¥123.725 = US$1 in June 2015, to ¥109.778 = US$1 in August 2017. However, this was not enough to offset the 37% drop in the value of yen against the dollar from 2012 to 2015.

Taiwan's housing market is now improving, amidst modest economic growth. The nationwide house prices rose slightly by 0.37% during the year to Q2 2017, in contrast with a y-o-y decline of 4.58% last year. Quarter-on-quarter, house prices increased 1.28% in Q2 2017.

House prices had been falling over the past two years, after dramatic government measures to curb speculative house purchases. But demand is picking up again, with property transactions in Taiwan's six major metropolitan areas (Taipei, New Taipei, Taoyuan, Taichung, Tainan, and Kaohsiung) rising by 20% during the first half of 2017 compared to the same period last year. This contrasts with a sharp decline in property demand during 2016. Residential construction licenses also increased 4.1% y-o- y in the first half of 2017, after falling by 26% in 2016, according to the country's Ministry of Interior.

Taiwan's economy grew by 2.1% y-o-y in Q2 2017, following a 2.6% growth in the previous quarter, 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 modest house price falls.

House prices fell in four of the nine Asian markets for which figures were available during Q2 2017.

Singapore's housing market is still weak. House prices fell by 3.23% during the year to Q2 2017, after a 2.16% y-o-y decline during the same period last year. It was the fifteenth consecutive quarter of house price falls. House prices fell by 0.19% q-o-q during the latest quarter.

Despite this, demand is now rising strongly. New private residential units sold increased 36.4% in Q2 2017 from a year earlier, to 3,077 units, according to the Urban Redevelopment Authority. In contrast, the number of private residential units launched fell by 15.2% y-o-y to 2,011 units over the same period.

Singapore's economy expanded by 2.9% in Q2 2017 from a year earlier, up from the previous quarter's 2.5% growth. The economy is expected to grow by 2% to 3% 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 Ministry of Trade and Industry.

Thailand's property market continues to lose steam. Nationwide house prices fell 2.8% during the year to Q2 2017, in contrast to a y-o-y rise of 4.29% in the previous year. House prices increased slightly by 0.68% q-o-q in Q2 2017.

Thailand's economy expanded by 3.7% y-o-y in Q2 2017, the fastest pace in more than four years, mainly buoyed by improving farm sector, strong tourism, and recovering exports. Economic growth is projected between 3.5% and 4% this year, according to the National Economic and Social Development Board.

Indonesia's housing market remains sluggish, despite a booming economy. Residential prices in the country's 14 largest cities fell by 1.1% during the year to Q2 2017, the tenth consecutive quarter of y-o-y declines. House prices increased slightly by 0.5% 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, according to the IMF.

South Korea's housing market is also fragile, with the nationwide housing purchase price index falling slightly by 0.67% y-o-y in Q2 2017, in contrast to the rise of 1.07% a year earlier. House prices rose by 0.67% q-o-q during the latest quarter.

Korea's economy grew by 2.7% in Q2 2017 from a year earlier, slightly down from the previous quarter's 2.9% growth, according to the Bank of Korea. The new government under President Moon Jae-in recently raised its 2017 growth forecast to 3%, up from the previous estimate of 2.6% but still below the country's average growth of 3.5% in the past seven years.

Detailed country-by-country analysis: Americas

U.S. house prices continue to rise, sentiment remains bullish

The S&P/Case-Shiller seasonally-adjusted national home price index rose by 4.07% during the year to Q2 2017 (inflation-adjusted), slightly up from a y-o-y rise of 3.86% in Q2 2016. House prices increased 2.62% 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 4.65% y-o-y in Q2 2017 (inflation-adjusted), from y-o-y rises of 3.72% in Q1 2017, 4.44% in Q4 2016, 5.11% in Q3 2016, and 4.81% in Q2 2016. The index increased 1.07% q-o-q in Q2 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 11.6% during the year to Q2 2017, followed by Portland (6.4%), Dallas (6%), Denver (5.9%), Detroit (5.8%), Las Vegas (5.5%), San Diego (5.4%), Tampa (5.2%), and Boston (4.6%).

Cleveland and Washington saw the lowest growth in inflation-adjusted house prices at 1.3% and 1.4%, respectively.

In Q2 2017, the economy grew by an annual rate of 3%, an improvement from the previous quarter's lacklustre 1.2% growth and the strongest pace in more than two years, thanks to robust consumer spending, as well as strong business investment. 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 world's biggest economy is expected to expand by 2.1% this year.

Residential construction activity is mixed. New privately-owned housing units authorized rose by 4.1% y-o-y in July 2017, according to the U.S. Census Bureau. Over the same period, the total number of housing starts fell by 5.6%, while completions rose strongly, by 8.2%.

Demand is falling. New house sales were down by 8.9% y-o-y in July 2017, according to the U.S. Census Bureau.

Despite the recent decline in demand, U.S. homebuilders remain bullish, reflecting their optimism that demand will pick-up again in the coming months. U.S. homebuilder sentiment stood at 68 in August 2017, up from 64 in the previous month and 59 in the same month last year, according to the National Association of Home Builders (NAHB). A reading of 50 is the midpoint between positive and negative sentiments.

"The fact that builder confidence has returned to the healthy levels we saw this spring is consistent with our forecast for a gradual strengthening in the housing market," said NAHB's chief economist Robert Dietz.

Canada's house price rises accelerating

House prices in Canada's eleven major cities surged by 13.08% during the year to Q2 2017, despite repeated market-cooling measures, 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 5.69% q-o-q in Q2 2017.

Toronto saw the biggest inflation-adjusted house price increases of 28% y-o-y in Q2 2017, followed by Hamilton (24.3%), Victoria (16.3%), and Vancouver (7%). Modest to minimal house price rises were recorded in Ottawa (2.3%), Montreal (1.2%), Halifax (0.8%), Calgary (0.4%), and Winnipeg (0.1%).

In contrast, Quebec and Edmonton saw house price falls (inflation-adjusted) of 1.6% and 1.1%, respectively.

Home sales fell by 11.9% in July 2017 from a year earlier, according to the Canadian Real Estate Association (CREA), with declines in close to 60% of all local markets, including the Greater Toronto Area and nearby markets. There were about 5.2 months of inventory on a national basis July 2017, up slightly from 5 months the previous month and the highest level since January 2016.

The Bank of Canada raised its key interest rate by 25 basis points to 0.75% in July 2017, amidst higher-than-expected economic growth, fuelled by a surge in household spending. The key rate had previously been 0.5% from July 2015 to June 2017 and 1% from September 2010 to December 2014.

In Q2 2017, Canada's economy grew at an annualized rate of 4.5%, up from the previous quarter's 3.7% growth and the fastest pace in six years, according to Statistics Canada. The economy is expected to grow by 2.8% 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 Bank of Canada.

South America's downturn continues

Brazil's house prices continue to fall, albeit at a slower pace, amidst gradually improving economic conditions. In Sao Paulo, house prices fell by 2.15% during the year to Q2 2017, after falling by 3.75% in Q1 2017, 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 rose slightly by 0.05% in Q2 2017, its first quarterly increase after falling for nine consecutive quarters.

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 July 2017, the central bank cut the key rate by 100 basis points to 9.25%, the seventh 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 0.5% in 2014, according to the IMF. The economy is expected to grow by a meagre 0.3% this year and by 1.3% in 2018. 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 20 months, the real recovered by about 28.7% to reach an exchange rate of BRL3.1513 = USD1 in August 2017.

The country continues to face immense political turmoil. Over the past year, President Dilma Rousseff 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. Worse, the chances that the government will pass controversial bills and implement social security reform have become more uncertain, with the national elections scheduled for 2018.

Unemployment was 12.8% in the quarter ended July 2017, down slightly from an all-time high of 13.7% registered in the previous quarter, according to the country's statistics agency, Instituto Brasileiro de Geografia e Estatistica (IBGE). The number of unemployed also declined 5.1% to 13.3 million people over the same period. In August 2017, Standard & Poor's affirmed Brazil's sovereign rating to junk status and negative outlook, in line with the other two major rating companies.

Chile's housing market remains weak, amidst a slowing economy. The average price of new apartments in Greater Santiago increased by 2.11% during the year to Q2 2017, from a y-o-y rise of 2.78% during the same period last year. On a quarterly basis, house prices increased slightly by 0.79% in Q2 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 0.73% during the year to Q2 2017, a sharp slowdown from the y-o-y rise of 5.32% the previous year. However on a quarterly basis, house prices actually increased 3.02% in Q2 2017.

From the perspective of foreign homebuyers the slowdown in property prices is greater, because of the peso's sharp depreciation in recent months. Mexico's peso slumped against the US dollar by 14.9% in 2015 and by another 16.7% in 2016, the biggest annual decline since 2008. However, during the first eight months of 2017, the peso recovered by more than 20% to reach an exchange rate of MXN17.7989 = USD1 in August 2017.

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 grew by 1.8% y-o-y in Q2 2017 and is expected to expand between 1.5% and 2.5% during the full year.

Detailed country-by-country analysis: Middle East

House prices fell in all four Middle Eastern housing markets for which figures were available during the year to Q2 2017.

Qatar's housing market is now in trouble, amidst a sharp economic slowdown and the ongoing diplomatic crisis in the region. The nationwide real estate price index dropped 6.25% during the year to Q2 2017, its fourth consecutive quarter of y-o-y declines and a sharp turnaround from the previous year's rise of 1.75%. Though, property prices increased 1.1% q-o-q during the latest quarter.

Surprisingly, demand is surging. In July 2017, real estate transactions rose by 50% y-o-y to QAR1.8 billion (US$488 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. However, demand is expected to fall again in the remainder of the year and the overall  housing market is expected to remain depressed in the medium term, because of the recent decision of several Arab countries, including Saudi Arabia and Egypt, to cut diplomatic ties with Qatar and impose a land, sea and air embargo on the small gas-rich state.

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. Economic growth is expected to slow sharply to just 1.6% for 2017-18, according to The Economist Intelligence Unit.

Egypt remains weak, with the nationwide real estate index falling by 5.32% during the year to Q2 2017, an improvement from the annual decline of 11.2% recorded in a year earlier. Quarter-on-quarter, house prices fell 3.92% during the latest quarter. However in nominal terms, house prices are rising in Egypt due to extraordinarily high inflation caused by the government's decision in November 2016 to shift to a floating exchange rate regime that resulted to a dramatic depreciation of the Egyptian pound (EGP) against major currencies.

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.

Dubai's residential property prices fell 2.51% during the year to Q2 2017, an improvement from the price decline of 6.96% a year earlier. It was the tenth consecutive quarter of y-o-y house price falls. House prices fell slightly by 0.06% 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. During the first half of 2017, the value of real estate transactions rose by 16.8% y-o-y to US$35.9 billion while the number of transactions increased 26% to 35,571, 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 just 1.8% this year while Dubai will grow by 3.1%. For the country as a whole, UAE is expected to see a GDP growth of just between 1.5% and 2.2% this year, mainly due to weaker-than-expected oil prices and OPEC-led production cuts.

Israel's decade-long house price boom could now be over, as government cooling measures intensify. The nationwide average price of owner-occupied dwellings dropped 1.93% y-o-y in Q2 2017, after rises of 2.53% in Q1 2017, 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 4.25% q-o-q in Q2 2017.

After record sales of almost 31,600 units in 2015, sales of new dwellings fell by 5.4% y-o-y to 29,878 units in 2016, as mortgage interest rates continue to rise, according to the Central Bureau of Statistics (CBS). During the first half of 2017, new dwellings sold plunged 16.9% to 13,569 units as compared to the same period last year. Residential property sales have fallen in all districts, except Haifa.

Dwelling starts were down by 0.4% y-o-y in 2016 and fell by 8% in Q1 2017 from a year earlier. On the other hand, completions were up by 5.4% y-o- y in 2016, the highest since 1999, and increased by 15.4% y-o-y in Q1 2017.

Israel's economy grew by a seasonally-adjusted annualized rate of 2.7% in Q2 2017, an acceleration from a meager growth of 0.6% in the previous quarter, mainly due to gains in consumer spending and fixed investment. The economy is forecast to expand by around 3.4% this year and by another 3.3% in 2018, 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, according to the Bank of Israel (BOI). The BOI kept its benchmark interest rate at a record low of 0.1% in August 2017, in an effort to boost economic growth while maintaining price and financial stability.

Detailed country-by-country analysis: Oceania

New Zealand's housing market is now slowing sharply, mainly due to the introduction of new lending restrictions in October last year and worsening affordability. The nationwide median house prices rose by 3.99% during the year to Q2 2017, a sharp slowdown from y-o-y growth of 10.43% the previous year. House prices dropped 2.49% q-o-q during Q2 2017.

Total dwellings sold across New Zealand were down 24.5% y-o-y in July 2017, according to the Real Estate Institute of New Zealand (REINZ). All regions saw falling demand, with Waikato registering the biggest y-o-y drop in sales volume of 32.2% in July 2017, followed by Auckland (-30.6%), Otago (-29.8%), Southland (-27%), and Northland (-26.9%). The number of sales to sell eased by four days to 35 in July 2017 from a year earlier, according to REINZ. During the year ended July 2017, the number of new dwelling consents rose by 4.5% y-o-y to 30,404 units, accordinStatistics New Zealandeconomy grew by almost 4% in 2016, the highest growth since 2007. The economy is expected to expand by 3.2% this year and by another 3.7% in 2018, according to the New Zealand Treasury. The Reserve Bank of New Zealand (RBNZ) left the official cash rate (OCR) unchanged at a record low of 1.75% in August 2017, amidst growing signs of a housing market slowdown.

Detailed country-by-country analysis: Caribbean

Puerto Rico has emerged as the weakest housing market in our global house price survey, amidst continued economic woes, high unemployment, massive emigration, and a near-catastrophic national debt crisis and credit rating downgrades. The seasonally-adjusted purchase-only house price index (inflation-adjusted) dropped 9.59% during the year to Q2 2017, in sharp contrast with the y-o-y rise of 3.26% a year earlier. House prices fell by 2.89% q-o-q in Q2 2017.

Historically, Puerto Rico's economy has closely mirrored trends in the United States. However the latest economic downturn has been more intense and has lingered longer in Puerto Rico. GDP has grown very little or declined over the past eight years, contracting every year from 2007 to 2016, with an exception in 2012 when the economy grew slightly by 0.5%. Puerto Rico has lost about 20% of its jobs since 2007. The population has shrunk by about 10% in the past decade. The poverty rate is now at 45%. And public health and retirement systems are now insolvent. Puerto Rico filed for the equivalent of bankruptcy protection in May 2017, unable to pay its massive debt or provide its citizens effective services. With US$70 billion in debt and US$50 billion in pension liabilities, Puerto Rico's bankruptcy filing is the biggest in the history of the United States.

The housing market has suffered tremendously. After huge annual house price increases in the early 2000s, the housing market came crashing down in 2008. Prices have dropped 37% in real terms from 2008 to early-2017.

Source:Global Property Guide

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