City&Country: Offshore-- The world's housing market recovery has stalled

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The housing market recovery has stalled, according to online research house the Global Property Guide’s latest house price survey. During 2010, only 15 countries for which 4Q statistics are available experienced house price increases, while 21 countries had house price reductions. However, 18 housing markets performed better in 2010 than the previous year, while 16 countries performed worse. In two countries, there was no appreciable change since the previous year.
The Global Property Guide’s statistical presentation uses price changes after inflation, giving a more realistic picture than the more upbeat nominal figures usually preferred by real estate agents.

Uneven recovery in EuropeLatvia was the best performer in Europe during 2010. Standard-type apartments in Riga were up 19.09%. The Latvian property market began recovering in 4Q2009, and by 3Q2010 apartment prices had risen a surprising 24.73% y-o-y.
Another strong performance came from Estonia, where Tallinn apartments experienced 7.91% price rises during 2010. Tallinn apartment prices declined 31.08% during 2009. Estonia’s strong 4Q performance may be due to anticipation of the adoption of the euro, which occurred in January 2011.
Ireland suffered the worst price decline of all countries surveyed. In 2010, average house prices in Ireland fell by 11.60% to €191,776 (RM806,510), compared with 2009’s price decline of 13.51%. Irish prices have now fallen 39.64% from their end-2006 peak of €310,831, according to the Permanent TSB/ESRI house price index.
Housing  markets in the former Soviet Bloc countries continue to suffer. In Bulgaria, house prices fell 9.51% in 2010, after falls of 26.36% the previous year, while in Hungary,  prices fell 6.66% in 2010, after falling 15.66% the previous year.
In the Slovak Republic, prices saw a 3.14% drop in 2010, after falling 12.70% the previous year, while Croatian prices fell 5.06% in 2010, after falling 2.39% the previous year.
In Poland, house prices in the capital city, Warsaw, were down 2.19% in 2010, after falling 8.09% the previous year. House prices in Slovenia were down 2.69%, after falling 5.22% the previous year. Lithuanian prices fell by 6.76%, after price falls of 29.29% the previous year, while in the Ukraine, house prices fell by 9.47% in 2010 (not adjusted for inflation), after a fall of 30.22% in 2009. Two exceptions to these continuing house price falls in the former Soviet Bloc have already been mentioned — Estonia (+19.09%) and Latvia (+7.91%).
In Norway, house prices rose 4.29% during 2010, which is less than the previous year’s 10.07% rise, perhaps because the Norges Bank raised its key policy rate to 2% in May last year. Norway’s inflation rate is currently 1.5%.
Sweden and Finland also had more moderate price increases in 2010. Sweden’s house prices were up 3.29%, compared with 7.50% the previous year. Finland’s house prices rose 2.63%, compared with 9.05% in 2009.
Germany surprised everyone by posting 1.55% house price increases in 2010, buoyed by the country’s economic recovery and employment growth. In 2010, GDP rose 3.6% (unadjusted). In Switzerland and France, house prices rose a meagre 0.80% and 0.33%, respectively, a more lacklustre performance than in 2009 (+3.39% and +1.87%, respectively).
Other European markets which have not yet recovered, but experienced slower house price drops in 2010 than the previous year, include The Netherlands (-2.64%), Iceland (-4.18%), and Spain (-5.93%). More severe house price downturns in 2010 than the previous year (based on inflation-adjusted house price changes) were experienced in Greece (-9.75%) and Turkey (-4.80%).

Still no recovery for US housing marketHouse prices in the US fell by 1.13% in 4Q, or by 5.16% over 2010, according to the Federal Housing Finance Agency’s purchase-only index. High unemployment (at 9%) and declines in house prices prompted banks to resume repossessions, resulting in house prices falling further amid excess supply.
The seasonally adjusted Case-Shiller index was even more negative, as it slipped by 5.3% during 2010 and fell 2.36% in 4Q2010. The market still seems far from the bottom, and further price falls may occur if oil prices rise, especially as the number of foreclosures continues to be high.

Robust increases despite cooling measures in AsiaHousing markets in Singapore (+13.60%), Taiwan (+9.70%), Japan (+5.71%), Thailand (+2.92%) and Philippines (+0.19%) recorded price increases during 2010, supported by strong economic expansion and all-time low interest rates. Shanghai, China, on the other hand, experienced a slight fall of 1.95%.
In Singapore, private home prices climbed 13.6% during 2010. Government interventions in August 2010 have not dampened transaction volumes, but the fact that the price rise in the final quarter was only 1.76%, and that q-o-q price rises have trended down since 4Q2009, suggests that home price rises in Singapore are moderating.
Taiwan’s housing market remains hot, despite government efforts. Prices rose 9.7% during 2010, and a surprising 7.38% in the last quarter. These earlier price rises prompted the central bank to raise anew the benchmark interest rate to 1.625% amid concerns of house bubble formation, and to limit loan-to-value ratios on loans for second houses to 60%.
In Japan, condominium prices have been rising since January 2010. The average price of existing condominiums in the Tokyo metropolitan area rose 5.71% y-o-y.
Thailand is finally back in the limelight after suffering house price declines since 2006. Over 2010, single detached homes rose 2.92%, with a rise of 5.84% during the latest quarter. The Thai statistics are somewhat unsatisfactory, as detached houses are not the most common dwellings in an increasingly urbanised Thailand.
The Philippines has had its first year of house price growth after two years of decline. During 2010, secondary market prices for 3-bedroom condominiums in Makati rose 0.19%, with a 0.20% rise occurring during 4Q2010.
In China, second-hand home prices in Shanghai fell 1.95% during 2010, based on prices published by eHomeday.
Israeli house price rises have barely cooled, despite the central bank’s efforts.
Israeli house prices posted 13.43% growth during 2010, compared with the previous year’s 18.15%. There have been six quarterly double-digit house price rises in Israel since 3Q2009. —

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 848, Mar 7-13, 2011