2009/03/06

South Africa is not the only country that is now firmly in negative growth territory.

House prices in at least 35 countries across the globe fell in fourth quarter 2008, figures released this week by UK-based property group Knight Frank show.

A year earlier (fourth quarter 2007), only 12 countries were in negative growth territory, according to the latest Knight Frank Global House Price Index. The latter tracks house price movements in 43 countries on a quarterly and annual basis.

Nicholas Barnes, head of international residential research at Knight Frank, says the impact of the credit crunch has now affected virtually every housing market in the world. Even prices in those countries that still recorded positive growth for 2008 on an annual basis started to fall by year-end.

The Knight Frank index shows that Dubai was the strongest performer in 2008, with average house prices up almost 60%. However, Barnes says much of this gain may well be wiped out in 2009. Latvia saw the biggest falls, with house prices plummeting 33,5% in 2008. The UK and US count among Knight Frank's five worst performing markets for 2008 with price falls of -14,7% and -12,1% respectively.

Seven countries still recorded double-digit growth on an annualised basis in fourth quarter 2008 including Russia (19,7%), Czech Republic (19,6%) Bulgaria (12,5%) Slovakia (10,9%) and Israel (10,5%). SA came in at 17th spot with growth of 0,1% in fourth quarter 2008 year-on-year (y/y). However, like most other countries that still saw prices rise on an annual basis in fourth quarter 2008, SA house prices fell (-0,2%) on a quarterly basis.

Barnes says unsurprisingly, not all housing markets are at the same point in the cycle of the global downturn. This means that on an annualised basis, a number of countries tracked in the Knight Frank index are still reporting price growth. "However, the wave of depression is hitting all markets, with more than 80% of countries recording negative growth in the final three months of 2008.'

Barnes says latest government and central bank house price data for fourth quarter 2008 has confirmed that conditions in residential property markets across the globe continue to worsen. In fact, he believes that some official figures do not yet reflect the true extent of the decline.

"It is now clear that no market will escape unscathed from the global financial crisis. The scale of the impact will vary according to the structure not just of the housing markets themselves but also the underlying economies."

Looking forward, Barnes says this year is likely to be more difficult than 2008. However, there is a "consensus of hope" that the trough of the current global housing cycle will be reached in 2009. - Joan Muller

Property24