Eurozone Flops Drag Down Global House Prices

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The flagging Eurozone is blamed for weighing down global house prices.

By the end of September 2012, house prices were only 5.2% above the lows recorded in the wake of the global downturn in 2009, says global real estate firm Knight Frank.

They say that stalling house prices in the Eurozone’s 17 countries are dragging down the global average and as a result, prices fell by 1.8% in the year to September 2012.

The figures hide some poor performing economies – sluggish Ireland was pushed out of bottom place with a 9.6% fall in property values by Greece’s even worse 11.7% drop in prices.

British property prices continue to struggle, recording a 1.6% drop in the third quarter.

Hardest hit

A Knight Frank spokesman said: “Eurozone house prices continue to be the hardest hit and, as a result, European countries now make up the bottom 12 places of our index.

“It’s no coincidence they are there since the economy is in a second recession in three years.

“The Eurozone isn’t alone – many of the world’s housing markets are in need of an effective stimulus to help them from flagging.”

Other poor European performers include Spain, with a 9.3% price reduction, Portugal with a 3.5% decrease and prices in Italy slumped 3.5%.

The figures, which are based on government or central bank data, also reveal which countries experienced a boom in their house prices.

South America experienced 9.8% growth – led by Brazil, where prices surged by 15.2% in 12 months.

Asia Pacific house prices chalked up a 4.2% increase, seeing Hong Kong perform best with a 14.2% increase.

Price stagnation

Turkey climbed to third place with an 11.5% growth in house prices.

The report also highlights prices in the US have picked up, which will have a positive effect on global property markets. Prices rose 3.6% year on year..

US vacancy rates are also at their lowest since 2005 and housing starts are up 49% on 2011.

“Prices this year in Europe will be affected by lack of confidence, property affordability and the levels of debt. In the US, strict lending criteria is in place, but we are also seeing early signs of economic growth,” said the report.

“In Asia Pacific, there are various regulatory measures in place to keep house price increases in check.

“The picture is not uplifting and the current stagnation looks set to continue well into 2013.”

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