Covid-Driven Home Buying Drives Global Home Prices Up
Australia recorded its highest rate of annual price growth since 2003, according to Knight Frank.
Australia recorded its highest rate of annual price growth since 2003, according to Knight Frank.
The ongoing boom in home buying during the Covid-19 pandemic pushed average property prices up 9.2% in the second quarter of the year, according to Knight Frank’s Global House Price Index, released Tuesday.
About one-third of markets, or 18 countries, saw double-digit increases in the second quarter, according to the report, which looked at 55 countries and territories. That’s up from seven at the same time in 2020 and 13 in the first three months of this year.
The index is rising faster than it has since the first quarter of 2005, well before the global financial crisis of 2008-09, according to Knight Frank, although not every region is experiencing a boom.
“A breakdown by developed and developing economies, however, reveals a more nuanced picture,” Kate Everett-Allen, Knight Frank’s head of international residential research, said in the report. “Ten of the world’s developed economies averaged price growth of 12% in the 12 months to June, double that seen in key developing markets (4.7%).”
Turkey remained at the top of the index, registering a 29.2% year-over-year rise in average home prices in the second quarter, the data showed. New Zealand ranked second, where prices jumped nearly 26% and the U.S. had the third strongest growth at 18.6%.
Australia (16.4%), Canada (16%) and Russia (14.4%) also made the top 10, the report found. Indeed, Australia recorded its highest rate of annual price growth since 2003.
“Only two markets saw prices decline in the year to June 2021—India and Spain,” Ms. Everett-Allen said. “This is the lowest proportion of markets registering a decline in prices since the Global House Price Index commenced in 2008.”
Spain saw a 0.9% year-over-year fall in average prices in the second quarter, the index showed. In India, they were down 0.5% in the same time period.
Despite the overall gains, some markets may be close to peaking, according to Knight Frank.
“In the U.S., mortgage applications have dipped and the share of households thinking now is a good time to buy hit a decade low of 28% in June,” Ms. Everett-Allen continued in the report. “The prospect of interest rate rises in markets such as New Zealand, the U.S. and the U.K. is also likely to weigh on buyer sentiment in the medium term. But conversely, recent tighter restrictions in South East Asia, New Zealand and Australia may yet spark renewed activity as lockdowns shine a light on homes and lifestyles.”
Reprinted by permission of Mansion Global. Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: September 14, 2021
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
Capital cities lead the way as median home values see clear upswing
Home values continue their upwards trajectory, recording the strongest monthly growth in 18 months, CoreLogic data shows.
The property data provider reports that their Home Value Index has noted a third consecutive rise in values in May, accelerating 1.2 percent over the past month. This is on the back of a 0.6 percent increase in March and 0.5 percent rise in April.
Sydney recorded the strongest results, up 1.8 percent, the highest recorded in the city since September 2021. The fall in Sydney’s home values bottomed in January but have since accelerated sharply by 4.8 percent, adding $48,390 to the median dwelling value.
Melbourne recorded more modest gains, with home values increasing by 0.9 percent, bringing the total rise this quarter to 1.6 percent. It was the smaller capitals of Brisbane (up 1.4 percent) and Perth (up 1.3 percent) that reported stronger gains.
CoreLogic research director Tim Lawless said the lack of housing stock was an obvious influence on the growing values.
“Advertised listings trended lower through May with roughly 1,800 fewer capital city homes advertised for sale relative to the end of April. Inventory levels are -15.3 percent lower than they were at the same time last year and -24.4 percent below the previous five-year average for this time of year,” he said.
“With such a short supply of available housing stock, buyers are becoming more competitive and there’s an element of FOMO creeping into the market.
“Amid increased competition, auction clearance rates have trended higher, holding at 70 percent or above over the past three weeks. For private treaty sales, homes are selling faster and with less vendor discounting.”
Vendor discounting has been a feature in some parts of the country, particularly prestige regional areas that saw rapid price rises during the pandemic – and subsequent falls as people returned to the workplace in major centres.
The CoreLogic Home Value Index reports while prices appear to have found the floor in regional areas, the pace of recovery has been slower.
“Although regional home values are trending higher, the rate of gain hasn’t kept pace with the capitals. Over the past three months, growth in the combined capitals index was more than triple the pace of growth seen across the combined regionals at 2.8% and 0.8% respectively,” Mr Lawless said.
“Although advertised housing supply remains tight across regional Australia, demand from net overseas migration is less substantial. ABS data points to around 15% of Australia’s net overseas migration being centred in the regions each year. Additionally, a slowdown in internal migration rates across the regions has helped to ease the demand side pressures on housing.”
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual