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European performance weighs on global housing markets

05 December 2012

Q3 2012 results show that Europe was the only region to see prices decline. But Brazil, Hong Kong, Turkey, Russia, Colombia and Austria experienced double digit growth.

  • The Knight Frank Global House Price Index rose by 0.1% in the threemonths to September 2012 and by 1%over a 12 month period
  • European countries occupy the bottom twelve rankings in terms ofannual price growth
  • Greece is positioned at the bottom of the rankings, with a 11.7% decline inprices in the year to September
  • Brazil recorded the highest annual increase in prices (up 15.2%) but thepace of growth is slowing
  • Price growth in Asia Pacific is also slowing, with 4.2% annual growth inthe year to September, compared to7.6% in the previous 12 months
Mainstream global property prices stand just 5.2% above the lows experienced in the wake of the financial crisis in Q2 2009. 
Knight Frank’s Prime Global Cities Index, which tracks the value of luxury property in 26 cities across the world, shows that prime property values have climbed by 18.7% over the same period.
With the Eurozone now in its second recession in three years, buyers’ confidence is at an all-time low - all the bottom 12 rankings are occupied by European countries this quarter.
The Eurozone’s 17 member states have on average seen prices fall by 1.8% in the 12 months to September. Other world regions such as South America and Asia Pacific have seen growth of 9.8% and 4.2% respectively.
Greece has now pushed Ireland off the bottom slot – where it has resided for five consecutive quarters – by recording an average price fall of 11.7% in the last year. Ireland, by comparison, has seen its rate of decline improve, up from -14.3% a year ago to -9.6%.
Despite positive data from the US – prices are 3.6% higher than in the third quarter of 2011, vacancy rates are at their lowest level since 2005 and housing starts are up 49% year-on-year - the US fiscal cliff casts significant doubt on this recovery. 
Asia’s policymakers are offering little hope of an Asian-driven recovery. China’s new leadership looks set to continue with stringent property cooling measures and new lending restrictions in Hong Kong are likely to limit the availability of credit.
Six markets recorded double-digit annual price growth in the year to September; Brazil, Hong Kong, Turkey, Russia, Colombia and Austria.
Kate Everett-Allen, International Residential Researcher at Knight Frank, said: “Confidence, affordability and debt are constraining Europe. Strict lending and the looming fiscal cliff may dent the early signs of growth in the US while regulatory measures in Asia are keeping housing markets in check. The current period of stagnation looks set to continue well into 2013.”