With home prices in the UK driving people to live in boxes [12] and Bob Shiller worried about the US [13], Bloomberg's Niraj Shah notes that the Knight Frank global house price index has risen to a record. The index, now 4% above the previous high in Q3 2008 is led by China and Emerging Nations (with Europe weakest) as investor speculation amid central bank liquidity fuels yet another bubble (that no one could see coming again).
Via Bloomberg's Niraj Shah (@economistniraj),
Record High for Global Index
[14]
Global house prices are gaining traction. Values rose an annual 4.6 percent in the third quarter compared with 1.7 percent in the same period in 2012, and the index is 12.7 percent above its financial-crisis low in 2009. Prices in more than 69 percent of the countries tracked by the index grew in the year through September, compared with 55 percent two years ago. The Knight Frank index incorporates house prices in 53 countries.
China, Emerging Countries Lead Price Growth
Prices in China rose the most, gaining 21.6 percent. Emerging economies made up the rest of the top five, with Taiwan, Indonesia, Turkey and Brazil recording price growth of more than 10 percent. The U.S., the biggest housing market, grew an annual 11.2 percent. The only countries outside Europe to experience declines were Japan, South Korea and New Zealand. Dubai recorded the largest growth rate for a city with 28.5 percent.
Europe Remains Weakest Region
While average values rose in every region, European property prices were the weakest performers in the year through October. Prices increased 0.8 percent in Europe, compared with 17.9 percent in the Middle East. Fourteen of the 17 countries experiencing annual price declines were in Europe. Average prices in Europe resumed growth in the second quarter.
European Prices Diverge
There is a widening divergence between countries in Europe. Annual house prices in Germany rose the most in the third quarter — 11.2 percent — while prices plunged 19.7 percent in Croatia over the same period. Ireland achieved the biggest turnaround, with values rising 4 percent in the three months through September. Property values were falling at a rate of 5.4 percent each quarter less than two years ago.