Europe’s property: Estonia – a second best performer

The Raekoja plats (Town Hall Square) is a city square beside Tallinn Town Hall at the center of Tallinn, Estonia

The global property markets: slowdown in Asia, US, Dubai and the Pacific, but Europe’s boom accelerates

The global house price boom continues. House prices in 31 of the 41 world’s housing

markets which have so far published housing statistics rose during 2014, using inflation-adjusted figures. The more upbeat nominal figures, more familiar to the public, showed house price rises in 32 countries, and declines in only 9 countries.

Ireland is now the world’s top performer, with housing prices surging by 16.62% during 2014, a remarkable acceleration from the increase of 6.18% in 2013. In all, seventeen European markets saw house prices rise more during 2014 than the previous year, and only five showed weaker performance.

However the world is now two-speed.

While house prices have continued to rise in the United States, and in Dubai, Australia, New Zealand and Brazil, momentum in almost all of these countries has weakened. Dubai’s house prices rose by 12.98% in 2014, the second greatest rise; but its house price rises have rapidly decelerated and may be going into reverse.

Asia has also generally weakened, with Japan and Hong Kong significant exceptions. In fact, China and Singapore’s housing markets are now two of the five weakest markets in our global survey.

Inflation-adjusted figures are used throughout this release, which covers the period till end-2014.

 

Momentum: 24 housing markets showed stronger upward momentum in 2014, while 17 housing markets showed weaker momentum. Momentum is a measure of the “change in the change”; simply put, if a property market has risen faster this year than last (or fallen less) momentum has increased.

 

By Region:

•    Europe’s property markets are surging ahead. Ireland is now the world’s fastest-rising property market, with residential prices surging by 16.62% during 2014, after an increase of 6.18% in 2013, fuelled by the fastest-growing economy in the EU. Irish house prices rose by 4.92% q-o-q during the latest quarter.

•    Estonia had substantial rises, with Tallinn’s average dwelling prices surging by 12.59% during 2014, after increases of 16.55% in 2013, 1.59% in 2012 and 8.33% in 2011. House prices increased 3.21% q-o-q during the latest quarter.

•    In Sweden, house prices rose by 8.78% in 2014, after 3.8% in 2013.

•    The UK, property market also performed strongly, with the nationwide house prices rising by 7.33% in 2014, a significant increase on 4.88% the previous year.

•    Other strong European housing markets include Iceland, with house prices rising by 5.18% during 2014, Netherlands (4.12%), Riga, Latvia (3.7%), Lithuania (3.61%) and Norway (3.61%). All of these European countries’ prices rose more in 2014 than the previous year. Moreover, all, except Norway, saw positive q-o-q growth in Q4 2014.

•    European housing markets with modest house price rises included Czech Republic, with house prices rising by 2.26% in 2014, Bulgaria (2.05%), Switzerland (1.8%), Croatia (1.69%), and Slovak Republic (0.25%). All, except Switzerland, performed better in 2014 than the previous year. Bulgaria, Switzerland and Slovak Republic saw positive quarterly growth during the last quarter of 2014.

•    Some parts of Europe continue to struggle. Seven of the 22 European housing markets included in our global survey saw house price falls in 2014.

•    In Kiev, Ukraine, the average price of new residential properties plummeted by 48.85% in 2014. House prices in the capital fell 9.7% q-o-q in Q4 2014. These sharp house price falls are mainly attributable to the hyperinflation currently being experienced in Ukraine caused by the collapse of the hyvnia, Ukraine’s currency.

•    In Russia, residential property prices fell 6.15% in 2014, after declining 5.86% in 2013. Russian house prices dropped 1.37% q-o-q in Q4 2014. In Greece, house prices fell by 4.34% during 2014, an improvement from a price decline of 8.06% in 2013.

•    Other European housing markets which saw smaller house price falls included Spain, with house prices down 1.96% during the year to Q3 2014, Finland (-1.88%), Romania (-1.78%) and Portugal (-0.52%). However, only Finland showed weaker performance during 2014 than the previous year.

•    Asian housing markets are mostly weaker, with two outstanding exceptions. Six of the nine Asian markets for which figures are available were weaker in 2014. In Singapore, house prices fell by 3.85% during 2014, after a decline of 0.9% in 2013. House prices fell by 0.89% q-o-q during the latest quarter. In Beijing, China, the price index of second-hand residential buildings fell by 5.67% during 2014, after spectacular growth of 16.93% the previous year. In Taiwan, house prices rose just 1.26% in 2014, a sharp slowdown after five years of spectacular price rises. In Indonesia, residential prices in the country’s 14 largest cities rose by a meagre 0.39% in 2014, down from 2.93% the previous year. In the Philippines, the average price of 3-bedroom condominium units in Makati CBD rose by 4.29% in 2014, decelerating from 9.86% in 2013. In Thailand, housing prices rose by 3.72% during 2014, down from 3.87% the previous year.

•    The US housing market’s upward momentum is slowing sharply. The S&P/Case-Shiller seasonally-adjusted national home price index rose by 3.85% during 2014, a sharp slowdown from the rise of 9.1% in 2013. Likewise, FHFA’s seasonally-adjusted purchase-only U.S. house price index rose by just 3.65% in 2014, down from 6.39% in 2013. Despite this, US residential construction activity and property transactions continue to rise.

•    Canada’s housing market continues to gather pace. House prices in the country’s eleven major cities rose by 3.47% during 2014, the biggest annual price increases since Q2 2012. House prices increased 0.75% q-o-q in Q4 2014.[/column]

 

Europe’s property market boom continues

Three of the five strongest housing markets in our global survey are in Europe

PR-inflation-2015The Irish housing market roared back to life last year, with residential property prices surging by 16.62% during 2014, a remarkable upturn from an increase of 6.18% in 2013 and annual declines of 5.6% in 2012, 18.71% in 2011, 11.65% in 2010, 14.33% in 2009 and 13.28% in 2008. House prices rose strongly by 4.92% q-o-q in Q4 2014.

The Irish economy is now the fastest-growing economy in the EU, with GDP growth of 4.8% last year, after meagre growth of 0.17% in 2013 and a contraction of 0.3% in 2012. The economy is expected to grow by 3.5% this year.

Estonia is the second best performer in Europe and the third best housing market in our global survey. In Tallinn, the average price of dwellings surged by 12.59% during 2014, after price increases of 16.55% in 2013, 1.59% in 2012 and 8.33% in 2011.

The number of purchase-sale contracts of real estate increased 3.6% in 2014, while transaction values were up by 13% over the same period, according to Statistics Estonia. The economy grew by 1.8% last year, after annual growth rates of 1.6% in 2013, 4.7% in 2012, 8.3% in 2011, and 2.5% in 2010, according to the IMF. Economic growth is expected to be 2% this year.

Sweden‘s house prices rose by 8.78% in 2014 from a year earlier, despite a weak economy, after house price rises of 3.8% in 2013 and 2.28% in 2012. The economy expanded by only 1.8% in 2014, after anaemic growth of 1.6% in 2013 and 0.9% in 2012, according to the European Commission. The Swedish economy is expected to recover in 2015, with growth of 3%.

Turkey’s housing market also performed strongly, with house prices rises of 8.05% during 2014, up from 5.73% the previous year. The Turkish economy grew by 3.5% last year, after 4.1% in 2013 and 2.1% in 2012.The economy is projected to grow by 3.5% this year.

The UK property market has continued to strengthen, with nationwide house prices rising by 7.33% in 2014, after an increase of 4.88% in 2013 and declines of 3.67% in 2012 and 3.39% in 2011. The UK economy expanded by 3%, after growth of 1.7% in 2013, 0.3% in 2012 and 1.1% in 2011, according to the British Chambers of Commerce. Economic growth is projected at 2.6% this year.

Other strong European housing markets include Iceland, with house prices rising by 5.18% during 2014, Netherlands (4.12%), Riga, Latvia (3.7%), Lithuania (3.61%) and Norway (3.61%). All of the abovementioned European countries performed better in 2014 than the previous year. All, except Norway, saw positive q-o-q house price growth in Q4 2014.

European housing markets with modest house price rises included Czech Republic, with house prices rising by 2.26% in 2014, Bulgaria (2.05%), Switzerland (1.8%), Croatia (1.69%), and Slovak Republic (0.25%). All, except Switzerland, performed better in 2014 compared to a year earlier. Bulgaria, Switzerland and Slovak Republic saw positive quarterly growth during the last quarter of 2014.

 

Several European housing markets still struggling

Ukraine is the world’s weakest housing market. In Kiev, the average price of new residential properties plummeted by 48.85% in 2014, after annual rises of 0.95% in 2013, 8.53% in 2012, and 5.21% in 2011. Over the past year, the hryvnia lost about three-quarters of its value in relation to the US dollar. Inflation is officially at 28.5%, but some unofficial figures suggest that it is really as high as 272%. In response, the central bank recently raised the benchmark interest rate from 19.5% to 30%.

Russia’s housing market remains weak, after a serious financial crisis amidst the Ukraine conflict and falling oil prices. Residential property prices dropped 6.15% in 2014, after price falls of 5.86% in 2013, and a rise of 9.74% in 2012. The Russian economy grew by a meagre 0.6% this year, following growth of 1.3% in 2013, 3.4% in 2012 and 4.3% in 2011, according to the Federal Statistics Office.

Greece continues to improve, though it remains the third weakest housing market in our global survey. Greek house prices fell by 4.34%, an improvement after declines of 8.06% in 2013, 13.77% in 2012, 9.17% in 2011, 11.58% in 2010, and 5.97% in 2009. Greek house prices fell only 0.55% during the latest quarter.

Greece’s economic growth is expected to pick up to 1.2% this year, after growth of 0.8% in 2014 and a prolonged recession from 2008 to 2013, according to the Hellenic Statistical Authority (ELSTAT).

Other European housing markets which saw minimal house price falls included Spain, with house prices falling by 1.96% during the year to Q3 2014, Finland (-1.88%), Romania (-1.78%) and Portugal (-0.52%). However, only Finland showed weaker performance during 2014 than the previous year.

 

Global Property Guide

The Global Property Guide  is a research house and web site dedicated to residential property. It covers market trends in 101 countries.
Matthew Montagu-Pollock
The Global Property Guide’s publisher lives in Bristol, UK.