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Q2 2019: house price slowdown in Asia-Pacific, North America, and some parts of the Middle East, though Europe’s boom continues.

MatchOffice

During the year to Q2 2019:

The global real estate boom continues, but is weakening. Real house prices (i.e., prices adjusted for inflation) rose in 26 out of the 46 world's housing markets which have so far published housing statistics.
The more upbeat nominal figures, more familiar to the public, showed house price rises in 41 countries, and declines in only 5 countries.
However after six years of strong house price growth, the U.S. housing market is cooling. The S&P/Case-Shiller seasonally-adjusted national home price index rose by just 1.46% during the year to Q2 2019 (inflation-adjusted). And according to FHFA numbers, U.S. housing markets fell slightly in the latest quarter.
More than half of our surveyed housing markets showed weaker momentum in Q2 2019 compared to the previous year, suggesting that global house price growth is now decelerating. 
Underlying economic trends do not appear to favour a continuation of the property price boom. North America seems likely at the tail-end of its long economic expansion. Asia-Pacific appears weakened by the trade war. And the Middle East suffers from political tensions and weaker oil prices.

Yet most of Europe continues to experience strong house price rises.

The strongest housing markets in our global house price survey during the year to Q2 2019 included: Puerto Rico (+13.24%), Montenegro (+11.68%), Sri Lanka (+10.64%), Chile (+9.05%), and Germany (+8.21%), using inflation-adjusted figures.

The biggest y-o-y house-price declines were in Egypt (-21.51%), Turkey (-12.1%), Dubai, UAE (-6.86%), Kiev, Ukraine (-5.45%), and Pakistan (-4.35%), again using inflation-adjusted figures.

Momentum is weaker. Only 22 of the world’s housing markets for which figures are available showed stronger upward momentum during the year to Q2 2019, while 24 housing markets showed weaker momentum, according to Global Property Guide’s research. Momentum is a measure of the "change in the change"; simply put, momentum has increased if a property market has risen faster this year than last (or fallen less). Weaker momentum indicates, at least, that the housing boom isn't strengthening.  In fact, global housing market momentum has been continuously weakening since Q1 2017.

Inflation-adjusted figures are used throughout this survey. In the case of Kiev, Ukraine, the Global Property Guide adjusts using the official U.S. inflation rate since Ukrainian secondary market dwelling sales are denominated in U.S. dollars.

The strongest performing markets:

Puerto Rico is now the strongest housing market in our global survey, with the seasonally-adjusted purchase-only house price index surging by 13.24% during the year to Q2 2019, a sharp improvement from the previous year’s minuscule growth of 0.38%, using inflation-adjusted figures. Quarter-on-quarter, house prices rose by 3.76% in Q2 2019. It is a surprising comeback after several years of house price falls, thanks to the government’s new initiatives, including tax incentives and other housing stimulus measures. Though the wider economy is still struggling and is projected to contract further by 1.1% this year and by another 0.7% in 2020, after 14 years of decline.

All figures that follow are inflation-adjusted.

Montenegro's housing market is growing rapidly, thanks to its booming tourism. The price of new dwellings rose by 11.68% during the year to Q2 2019, in contrast to the previous year’s 5.17% fall. In fact on a quarterly basis, house prices soared 18.24% during the latest quarter. The economy is projected to expand by 2.8% this year, following growth of 4.5% in 2018, 4.7% in 2017, 2.9% in 2016 and 3.4% in 2015.

Sri Lanka continues to perform very well, with nationwide house prices rising by 10.64% during the year to Q2 2019. Quarter-on-quarter, house prices fell by 1.01% during the latest quarter. Sri Lanka’s booming tourism sector is fuelling property demand. In 2018, Sri Lanka saw a record 2.3 million tourist arrivals, up 10.3% from a year earlier. The economy is projected to grow by 3.5% this year, after expansions of 3% in 2018 and 3.3% in 2017.

Chile’s housing market continues to grow stronger, thanks to its robust economy. The average price of new apartments in Greater Santiago surged by 9.05% during the year to Q2 2019, its ninth consecutive quarter of annual price rises. Quarter-on-quarter, house prices rose by 2.72% in Q2 2019. The economy is projected to grow by 3.4% this year and by another 3.2% next year.

Germany’s housing market remains very strong, buoyed by extremely low interest rates. The average price of apartments rose by 8.21% during the year to Q2 2019. On a quarterly basis, house prices increased 1.44% in during the latest quarter. However Germany’s economic growth was disappointing in 2018, with real GDP growth of just 1.4%, the country's weakest expansion in five years. The government recently cuts its growth projection this year to 0.5%, half the pace previously forecast.

THE WORLD'S REGIONS:

Europe’s house price boom continues

European house price rises continue unabated. In fact, six of the 10 strongest housing markets in our global survey are in Europe. House prices have risen in no less than 14 of the 23 European housing markets for which figures were available during the year to Q2 2019.

After a lackluster performance last year, Montenegro has emerged as the strongest housing market in Europe in our global survey, thanks to the effects of booming tourism. The price of new dwellings rose by 11.68% during the year to Q2 2019, in contrast to the previous year’s 5.17% fall. In fact, house prices soared 18.24% during the latest quarter. The economy is projected to expand by 2.8% this year, following growth of 4.5% in 2018, 4.7% in 2017, 2.9% in 2016 and 3.4% in 2015.

Long a picture of housing market stability, Germany was one of the few countries that avoided a house-price slump in the wake of the 2008-2009 global financial crisis. Since then, extremely low interest rates have encouraged demand. The average price of apartments rose by 8.21% during the year to Q2 2019, following y-o-y growth of 9.23% in Q1 2019, 6.78% in Q4 2018, 5.15% in Q3, and 1.74% in Q2. House prices increased 1.44% in during the latest quarter.

However Germany’s economic growth was disappointing in 2018, with GDP growth of just 1.4%, the country's weakest expansion in five years. Europe’s largest economy continues to struggle this year, with GDP rising by a meagre 0.7% in Q1 and 0.4% in Q2. In fact, the economy is at risk of recession after contracting by 0.1% quarter-on-quarter in Q2 2019, amidst falling exports.

The government recently cuts its growth projection this year to 0.5%, half the pace previously forecast.

Austria’s housing market continues to grow stronger, fuelled by surging demand. In Vienna, the residential property price index rose by 7.99% during the year to Q2 2019, a sharp improvement from last year’s 2.24% growth. On a quarterly basis, prices increased 3.98% in Q2 2019. The economy is projected to expand by 2% this year, following growth of 2.7% in 2018, 2.6% in 2017, 2% in 2016 and 1.1% in 2015.

The outlook for North Macedonia’s housing market is very positive.  Strangely enough a major cause is the government's recent decision to change the country's name (from “Macedonia” to “North Macedonia”) in a deal with Greece, which solves a long-standing dispute between the neighboring countries and opens the way for NATO and EU integration.

This is expected to support the country's long-term economic growth and political reforms. During the year to Q2 2019, the nationwide house price index rose by 6.21% - its highest growth in almost a decade. Quarter-on-quarter, house prices increased 6.4% in Q2 2019. The economy is projected to expand by 3.2% this year and 4% in 2020.

Other strong European housing markets include Malta, with house prices rising by 4.93% during the year to Q2 2019, Jersey (4.68%), The Netherlands (4.18%), Slovak Republic (3.74%), and Lithuania (3.04%). All, except Malta, recorded positive quarterly growth during the latest quarter. Slovak Republic, Lithuania and Jersey had stronger performances in Q2 2019 than the previous year.

Minimal annual house price rises were recorded in Estonia (2.59%), Spain (2.08%), Russia (1.83%), Ireland (0.9%) and Iceland (0.8%). Only Estonia and Ireland saw quarterly price growth during the latest quarter. On the other hand, only Russia had a stronger performance during the year to Q2 2019.

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