Two-speed Europe emerges in the Global House Price Index
The Global House Price Index recorded its weakest annual growth for three years, rising by just 0.3% in the year to March 2015, but this figures hides strong performances by a number of key countries, including several in Europe.
Weighted by a country’s GDP, the index, which tracks the movement of mainstream property prices, ensures countries such as China and the US have a greater influence than smaller economies such as Jersey and Malta.
With some of the larger economies such as Japan, France and crucially China all experiencing housing market slowdowns, this is masking the fact that overall a large number of countries are now recording a more sustainable level of growth.
Around 75% of the countries tracked by the index recorded flat or positive annual price growth in Q1 2015, three years earlier this figure was closer to 47.2%.
Hong Kong leads the annual rankings this quarter with mainstream prices ending the year nearly 19% higher in March. A lack of supply along with the popularity of smaller apartments due to affordability constraints is behind the acceleration in mainstream prices.
European countries which claimed almost exclusive rights to the bottom half of the rankings for several years are now more evenly spread with seven of the top ten countries now located in Europe. Turkey, Ireland, Luxemburg and Estonia rank highest, all registering double-digit annual growth.
But a two-speed Europe is increasingly evident. Cyprus, Greece, France and Italy sit amongst the 10 weakest-performing markets, notable by their absence however are Spain and Portugal. Prices in Spain are now rising at their fastest rate in six years due in part to improved mortgage lending.