According to the new Global House Price Index (GHPI) from London-based Knight Frank, which monitors the performance of conventional house prices worldwide, prices rose by just 0.5 percent in 2011 and fell by 0.3 percent in the fourth quarter. buying property in qatar for expats
The index's performance in the fourth quarter was its worst since the second quarter of 2009. This means that a global return to substantial house price growth is still a long way off.
There will be no turnaround until the difference between house prices and two of their main determinants - incomes and rents - narrows and the excess supply of new homes constructed in many areas prior to 2008 is absorbed.
Prices dropped in 60 percent of the countries represented by the index in the fourth quarter of 2011. If this pattern continues, the overall GHPI could easily fall into negative territory in 2012, especially if the Asian slowdown continues.
In Europe and North America, a combination of global economic uncertainty, low consumer confidence, and strict mortgage lending requirements is dampening growth, while in Asia Pacific, stringent government cooling measures are successfully containing house price inflation.
The slowdown in Asia has had a major effect. China, Hong Kong, and Singapore saw price increases of 42 percent, 21%, and 33%, respectively, in 2007. Growth was -2 percent, 11%, and 5% respectively last year.
China's slowdown has sparked speculation about possible government interference ease, but Nicholas Holt, Knight Frank's Asia-Pacific Research Manager, believes this is impossible. "While local governments are putting more pressure on Beijing to relax some of these measures, the central government appears set to maintain its property-tightening policies, which should keep market sentiment low during 2012."
Away from Europe and Asia, Brazil, a new addition to the index this quarter, is at the top of the rankings, with a price increase of 26% in 2011. Strong population growth, increasing household income, and an expanding mortgage market are all contributing to this remarkable success.
All 12 of the bottom rankings are held by European markets, with Ireland in last place, down 17 percent. Not all European economies, however, are in a state of dormancy. Despite the Eurozone's sovereign debt crisis, Estonia, Slovenia, Iceland, Norway, Switzerland, and Germany achieved annual growth rates of over 5%.
The index demonstrates that global housing market output is far from consistent. Although there is reason for cautious optimism in some areas, the overall trend for 2012 is unlikely to be optimistic.
The weakening job market in London is pushing down prime residential rents even further.
The average prime London rental price dropped by 0.2 percent in February, according to real estate company Knight Frank. Rents have now turned negative on a three-month basis, falling by 0.4 percent, bringing average rents down to levels seen in June 2011. Strong growth in mid-2011 led to a 6.7 percent annual increase in Q4 2011.
According to Liam Bailey, Head of Residential Research at Knight Frank, the latest round of rental price drops is due to weaker conditions in the central London job sector.
"The rapid recovery in rental levels between mid-2009 and late-2011, when rents increased by 26.9%, was propelled by a regeneration of the central London economy, following the ravages of the credit crunch and global recession," Bailey tells World Property Channel.
Rents had recovered all losses suffered in 2008 and early 2009 by October of last year, and had reached an all-time high of 1.8 percent above their previous peak in March ""The year 2008"
Continued demand-side expansion was needed for future development. However, as the City started to lose jobs in Q3 of last year, demand began to dwindle in October " Although job prospects in central London remain bleak, there are some signs that landlords should be optimistic. In the three months leading up to February, the number of new tenant registrations increased by 23% over the same timeframe last year ""While supply has increased as well, it has done so at a slower pace. Just a 13% increase in new property instructions over the same time last year "riod riod riod riod The ratio of new applicants to new instructions has risen from 3.1 to 3.5 in the last year, indicating that business conditions are starting to change in favor of landlords " The strongest part of the market remains the lower price ranges, with average rents in the £500 to £1,500 per week bracket falling by just 0.1 percent in the three months to February, compared to a 0.9 percent drop in the £1,500+ per week bracket.
"After such a significant increase in rents and the Christmas slowdown that was faced pre and post-Christmas, it is not shocking that rents have fallen by a marginal amount over the last three months," said Tim Hyatt, Head of Knight Frank residential lettings.
Corporate jobs is critical to the rental sector, but it is still too early in the year to forecast what rents will do for the next 6-12 months. Demand is still picking up, and most of our offices are reporting the healthiest instruction book they've ever seen. I am certain that these properties will be rapidly rented and that rents will continue to increase, assuming that the city does not make any more cuts."