The effect of covid-19 global property prices will probably not be known until much later on this year. Before the pandemic spread to Europe and North America, international real estate registered a steady increase across the globe. Read on to discover which markets were the movers and shakers in Q1 this year and what’s in store for the rest of 2020.
The latest Knight Frank Global House Price Index offers statistics for the first quarter of this year when covid-19 was largely confined to Asia. The figures for global property prices therefore reflect a certain normality.
The 56 countries covered in the Index show an average price increase of 4.4% in the year to Q1. Furthermore, 98.2% saw an increase with just Finland registering a drop in prices (-1.2%). This is the highest proportion since Knight Frank started compiling the statistics in 2008.
Leading the table for year-on-year price increases is Turkey where property went up by 15% in the 12 months to March. However, after adjustments for inflation, the figure drops to a more modest 6% leaving the top position to New Zealand. Here, house prices rose by 14.5% taking the country from 27th place in the table last year to 2nd this.
In third place sits Lithuania where real estate saw an uptick of 13.8% in the year to Q1. Four other countries posted double-digit increases in the year – Ukraine, Luxembourg, Portugal and Croatia.
The top three countries appear again on the table for quarterly variations, although Lithuania rises to first place. The Baltic country saw a 12.2% increase in the quarter. New Zealand registered a more moderate trend in the first three months of this year with a 6.7% rise. In Turkey, real estate went up by 5.6% between January and March.
The other end of the scale tells a different story and while all but one country saw prices drop in the year, the quarterly statistics were not as positive. House prices fell in 13 locations on the Index, although by no more than 3%.
Hungary saw the biggest fall in property prices with a 2.9% drop. In second place was Finland, close behind with a 2% decrease. Real estate in Jersey and Malaysia took joint third place with a 1.3% drop.
Global property prices caveat
However, as Knight Frank mentioned at the beginning of their report, the trends seen in Q1 global properties prices are pre-pandemic. During the first quarter of the year, covid-19 had yet to spread widely beyond Asia. This means that its economic effects were not yet global.
The Index points out that the influence of covid on property market across the world will probably be most apparent in Q3 this year. However, analysts believe that the pandemic will most impact sales volume rather than prices.
“It is unlikely that sellers will lower asking prices significantly given low interest rates,” says the Index. It also points out that “the introduction of mortgage holidays will help prevent widespread distressed selling”. Global property markets can therefore expect less activity over the next few months with stability in prices.
However, much depends on individual markets. In the US, where property prices went up by 4.4% in the year, real estate agents are predicting a busy summer season. The recent surge in buyer interest together with an acute shortage of property would appear to indicate high sales volumes over the next few months.
(Source: Knight Frank)