Residential prices are now increasing in majority of locations across the globe, with nearly 70 percent of the locations in the Knight Frank Global House Price Index reporting growth in the third quarter 2009. This is in comparison with less than 50 percent growth rate reported during second quarter of the year.
However, there still lies a clear divergence from top to bottom of the table. Israel continues to be the best performer on an annual basis, and is the only country to have recorded double-digit growth during the past year.
Prices in Dubai have dropped by 47 percent, despite posting a small recovery during the third quarter. The recent debt issue with Dubai World and the subsequent loss of confidence by investors implies that even this nascent rally is under threat.
The European countries are yet to record growth since the credit crunch, particularly Spain, Denmark and Ireland, where an oversupply of stock is hindering growth in prices. This is in contrast to the case of UK, which, despite being hit badly, is depicting a strong comeback, as shortage of houses for sale is contributing to growing values with demand outstripping supply.
Other locations that depicted increase in prices are Australia and several other Asian economies which showed a quarterly growth of 6 percent in Hong Kong and 2.5 percent in mainland China. The Q3 figures are not available for India, but prices are already increasing in Q2 and the trend seems to continue.
In few locations, particularly in Singapore, the strength of recovery is such that there are talks about development of another bubble. It is worth noting that house prices in almost 60 percent of the countries in the index, but are still lower than a year ago.
The global recovery from recession is unlikely to be trouble-free, with the recent issues in Dubai highlighted. But it looks like any further falls are likely to be corrections, rather than the start of another round of drastic reductions. Posted on 12/12/2009
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