_Iceland leads Global House Price Index

Iceland leads the rankings for the first time since our index began in 2006. Prices increased by 14.7% on average in 2016. A strengthening economy – the IMF estimate GDP rose by 4.9% in 2016 – two base rate reductions last year and rising interest from foreign buyers explains the jump from 9% in 2015.

House prices around the world increased by 6% on average in 2016, up from 4.1% in 2015, the highest annual rate recorded since the first quarter of 2014.

The top of the rankings table looks significantly different from a year ago. Long term frontrunners Turkey and Sweden have slipped down the rankings from 1st and 3rd position in 2015 to 5th and 20th respectively in 2016. 

A weakening lira, a rate rise to 8% and recent security concerns have dented household confidence in Turkey. Sweden, for its part, saw annual price growth halve from 12.3% in 2015 to 6.1% in 2016. New rules introduced in June 2016 mean higher deposits and loans capped at 85%.

China jumped from 43rd position in the rankings in 2015 to 7th in 2016 with average prices now increasing by 10.8% per annum according to the country’s National Bureau of Statistics. Despite strong price inflation in 2016 the trend is far from uniform and many of the cities experiencing the strongest increases have now seen new lending restrictions introduced.

Whilst the top 10 has shifted radically in the last year, the bottom of the rankings table looks broadly familiar. Ukraine, Taiwan, Singapore and Cyprus continue to be characterised by weak growth either due to ongoing geopolitical crises, economic fragility or cooling measures which are artificially restraining growth.

Although mainstream housing markets in the US (5.8%) and the UK (4.5%) recorded similar levels of annual price growth in 2016, the growth rate in the US increased compared with last quarter, whilst the UK drifted lower. A strong economic outlook and buoyant employment forecasts are boosting US household confidence.

Back in Europe, the Baltic states are quietly creeping up the rankings. Lithuania, Estonia and Latvia all sit within the top 20 and together averaged 9.9% growth in 2016, up from 5.2% a year earlier.

The overall picture is one of stable or rising prices, despite the global landscape of political and economic uncertainty. The number of housing markets recording price rises has increased from (43 in 2015 to 47 in 2016). With higher inflation and diverging monetary policies expected in 2017, we may see a widening gap between the strongest and weakest performing market.

Download the Global House Price Index to see where your country ranks.