Mainstream global house prices at the end of the third quarter last year stood only 5.2% above the lows hit in the wake of the financial crisis during the second quarter of 2009, according to Knight Frank, which said that the Eurozone continues to weigh heaviest on the index average.
Knight Frank said its most recent 12 month global price index, which ran up to the end of September 2012, rose by only 1%, with only a 0.1% price increase recorded in the three previous months. The index is largely based on official governmental or central bank data.
The global real estate expert said mainstream property prices had underperformed prime global property prices “by some margin”, citing its Prime Global Cities Index, which tracks luxury property values in 26 cities across the world, as having recorded an 18.7% increase over the same period.
Kate Everett-Allen, international residential research, who authored the report, said: “It seems that many of the world’s mainstream housing markets are flagging, bereft of any effective stimulus.”
House prices within the Eurozone continue to be hardest hit and consequently European countries make up the bottom 12 of the index, something Everett-Allen said is “no coincidence” given that the “eurozone is now in its second recession in three years”.
On average, house prices in the Eurozone’s 17 member states fell by 1.8% during the 12 months to September, comparing poorly with other regions such as South America where there has been growth of 9.8% and Asia Pacific which chalked up a 4.2% increase in house prices.
There was some positive news for Ireland’s property developers at least, although only relatively, as Greece pushed it from the bottom spot in the house price league table with a 12 month fall in prices of 11.7% versus Ireland’s 9.6%. The rest of the so-called ‘PIIGS’ countries also featured at the bottom of the list, with house prices in Spain falling 9.3%, 7% in Portugal and 3.5% in Italy during the 12 month period.
The UK’s residential property market also continued to languish in negative territory, with a 1.6% decline in prices since the third quarter of 2011.
There were of course some countries where house prices increased. Topping the list was Brazil which recorded 12 month growth of 15.2%, while Hong Kong came in a close second with an average increase of 14.2%. Turkey came in third with average growth of 11.5%.
It is also worth noting the globally significant US market has also begun to recover, with house prices now 3.6% higher than they were in the third quarter of 2011, vacancy rates at their lowest level since 2005 and housing starts up 49% on last year.
Summarising the index, Everett-Allen didn’t paint an uplifting picture.
“Confidence, affordability and debt are constraining Europe. Strict lending and the looming fiscal cliff may dent the early signs of growth in the US while regulatory measures in Asia are keeping housing markets in check,” she said.
“The current period of stagnation looks set to continue well into 2013.”