Tuesday, June 2, 2009

Real Estate Biggest Gainers And Losers In The First Quarter

Despite the global financial crisis some countries have managed to show small growth in their real estate market while others have tumbled significantly in the first quarter of 2009. Which countries have managed to overcome the global economic turbulence? The following article by Overseas Property Mall takes a look at the biggest gainers and losers of the first quarter and a housing outlook by Knight Frank Global.

The Q1 Knight Frank Global House Price Index 2009 hasn’t shown surprising results in the scheme of the global financial crisis. Some of the key highlights has seen Israel as the top performer with a 10.9% growth rate, followed by the Czech Republic with 9.9%.

On the contrary, the worst activities were seen in Dubai, Latvia and Singapore. Dubai recorded average price falls of 32%, Singapore 23% and Latvia 36% loss. On a quarterly basis, Dubai was the biggest loser with -40%.

In terms of best performing markets, Thailand with a 2.7% lift in values, Israel with +2.6% and Switzerland with +2.1% were showing promising results.

However, according to the Q1 report, a full 30% of the sources usually reported on had not returned their Q1 data at the time of writing the Knight Frank Global House Price Index.

Despite some of these markets having seen a rise in values, economists believe that the outlook for the global markets is still grim. Head of international research, Knight Frank, Nick Barnes said:
The world’s housing markets remain under intense pressure with little real evidence of any of the hoped for ‘green shoots’ and even the improvement in performance shown in some countries in the last quarter may yet turn out to be a false dawn according to some commentators. Recent projections from the Organization for Economic Co-Operation and Development (OECD) do little to promote a more optimistic viewpoint – GDP growth is forecast to drop by an average 4.3% in the OECD area in 2009 while by the end of 2010 unemployment rates in many countries will reach double figures for the first time since the early 1990s.

The inescapable trend is that the worst and most widespread economic recession since the 1930s continues to batter housing markets across the globe. Rising unemployment and concern among those still in jobs, added to constrained credit conditions, means that buyer demand for housing remains suppressed and confidence is low in most markets which is inevitably having a negative impact on house prices. There is sporadic evidence of buyers snapping up relative bargains, however of those buyers in a position to move, many are still waiting for clearer signs that markets are approaching the bottom of the cycle. Moreover, in a falling market, sellers are usually forced to a greater or lesser extent which means that opportunities to buy are greatly reduced and transaction volumes correspondingly low.

Against this backdrop, it is perhaps unsurprising that of the official sources used in the Knight Frank Global House Price Index, 14 (equating to 30% of the total index) had not reported Q1 data at the time of writing this report. We can only surmise that the data collection bodies have either been unable or unwilling to publish the data to timetable – perhaps a reflection of the ailing health of their respective residential property markets?

Of the first quarter data which we have received, Israel was the top performer over the 12 month period ending Q1 2009 recording growth of 10.9%, followed by the Czech Republic at 9.9%. The better performing markets tend to be smaller and with fewer structural imbalances. The worst performers were Latvia and Dubai who recorded a fall in average prices over the period of, respectively, 36% and 32%. Singapore also reported a hefty 23% drop in values while a further five countries also returned double digit declines.

On a quarterly basis, 69% of the countries from whom we received Q1 data reported a drop in prices compared to 82% in our Q4 2008 index. However, on an annualized basis, 72% of countries showed a fall in values compared to 59% in Q4. Given the high proportion of “absentees” for Q1, however, it would be potentially misleading to jump to too many hasty conclusions, although over half had shown annual and / or quarterly price falls at the last time of reporting. Nonetheless, the shorter term future direction of most underlying economies suggests that the world’s residential markets are likely to continue to suffer for some while.”

The UK saw a loss of values of - 16.5%, followed closely by the U.S with -16.9%. This resulted in a rank fall of 10 places from Q1 2008 to Q1 2009 for the UK and a respective loss of 4.5% year-to-year.

Biggest price rises, first quarter 2009

1. Jersey up 5.6%
2. Finland up 4%
3. Thailand up 2.7%
4. Israel up 2.6%
5. Switzerland up 2.1%

Biggest price falls, first quarter 2009

1. Dubai down 40.0%
2. Singapore down 16.2%
3. Estonia down 9.9%
4. Norway down 6.2%
5. Denmark down 6.1%

To see the full list of ranks click here.

This post can also be viewed on overseaspropertymall.com.

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