08.01.2008

Global housing markets in review and some forecasts for 2008

Global Property Guide

In 2007, the US housing market crashed, and Europe’s housing markets slowed. But house prices in Asia-Pacific gained momentum.

Bulgaria saw the world’s strongest house price growth at 30.6% (15.4% in real terms) to end-Q3 2007 from a year earlier.

Shanghai’s red hot housing market continued to rebound, despite efforts by the government to cool the market. House prices rose by 27.85% to end-Oct 2007 from a year earlier; a significant turnaround from 0.6% drop in 2006.

Singapore registered an annual house price increase of 27.6% (24% in real terms) to end-Q3 2007, significantly higher than the 7.6% price increase over the same period in 2006. In real terms, Singapore was the world’s best-performing housing market, given inflation of only 2.66%.

House prices rose by more than 10% year on year (y-o-y) in nominal terms in several developing countries - the Philippines, Colombia, South Africa, and Hong Kong. However, when adjusted for inflation, price increases were generally substantially lower.

In Europe most countries registered unimpressive y-o-y house price changes in 2007, aside from Norway and Estonia.

Property prices in Ireland started falling in 2007, the first time in more than 15 years. The Irish housing market had the biggest and longest house price boom among developed countries in recent memory.

Urban land prices in Japan’s six largest cities rose by 7.75% during the first half of 2007. Although Japan’s national urban land price index fell by 1.48% during 1H 2007, this is an improvement from the 2.8% price fall in 2006. The Japanese urban land price index is generally believed to lag reality, so significant recovery is taking place in the Japanese housing market.