Global Housing Market 'Weakest Since 2009'
Friday, September 23, 2011

Worldwide house price inflation averaged just 0.1% in the three months to June 2011 and increased by 1.7% over a 12-month period - the weakest growth since the depths of the financial crisis, according to new data from Knight Frank, the independent global property consultancy.

Knight Frank's Global House Price Index for the second quarter of the year paints a picture of constrained lending in most developed economies, low consumer confidence, and waning disposable incomes as many of the world's economies struggle to emerge from the slowdown which followed the 2008-09 financial crisis.

Knight Frank concludes that the overall fall in prices can also be partly attributed to slowing price growth in countries like China, Singapore and India during much of 2009 and 2010.

"There are clear signs that Asian policy measures, aimed at cooling asset price growth are having some success. Annual price growth in Singapore stood at 6.7% in Q2 2011, down from 37% a year earlier. Similar patterns are emerging in India and China, which both recorded quarterly price falls in the three months to June, of 1.7% and 0.1% respectively," the firm said.

Anti-inflationary measures had a lesser effect in Hong Kong, which saw 26.5% growth in the 12 months to the end of Q2. However, the report suggests that the tide is starting to turn, and in Q2 2011, quarterly price growth reached just 3.5%, down from 10.1% last quarter.

Nonetheless, Asia was the top-performing continent in terms of house price inflation for the seventh consecutive quarter, with 8% annual growth in Q2 2011.

The world’s prime or luxury markets do not appear to be falling into the same trend at the moment, however, with global economic and political turbulence underlining their ‘safe haven’ qualities in the eyes of the world’s wealthy elite, according to the firm.

While low interest rates are expected to keep housing markets afloat, Knight Frank sees prices continuing to go sideways for the foreseeable future.

"Looking forward it is difficult to be positive about price prospects in the developed world’s mainstream housing markets. Ongoing low interest rates and other market support measures are likely to spur increased sales activity rather than price growth," the firm concluded.