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Property Recovery  House Price Bubbles  Rise and Fall of House Prices 

By - Thursday 02 September 2010

According to the latest survey of house prices by Global Property Guide, there has been an uneven recovery in worldwide real estate markets during the first six months of 2010.

The figures show that east Asian countries have been leading the recovery and enjoying booming house prices.

Singapore, in particular, has been a star performer during 2010, with increases in property values of a staggering 34 per cent year-on-year. Hong Kong and Australia have also done well in the past six months, with year-on-year rises of 21 per cent and 15 per cent respectively. Overall, 18 countries saw house price increases over the period, while 18 others posted declines. The steepest of which occurred in Ireland, as real estate in the European destination lost on average 16 per cent of its value.

Asian Markets Perform Strongly, For Now

The news follows an announcement by property company Savills which claims that its profits for the first half of the year have been bolstered by interest in Asian markets and the emergence of Asian investors.

Profit before tax was GBP 14.4m in the first six months of the year and chief executive Jeremy Helsby was keen to point out that for the first time, revenues from overseas property made up more than half of the group's total.

Mr Helsby said Asian investors, who have "always been strong buyers of residential property in London are also now buying commercial property." However, the expert was concerned that the recovery in Hong Kong - where Savills has a leading market share - and other markets could be running out of steam. "The Chinese government's desire to contain overheating in the residential market, continued concerns over economic growth in many countries and prolonged low levels of debt availability indicate that the recovery is likely to flatten off during the coming months," he explains.

Mr Helsby's comments come just after analysts warned about the possibility of a bubble forming in China

According to Standard & Poor's (S&P), a sharp pickup in real state prices in China is a key risk to the nation’s economic growth and is leading to a classic bubble situation.

It is forecasting that prices will rise 10.3 per cent this year to an unsustainable level and they will need to come down if they are not to affect economic performance. "The property market looks darn good, it's been going up, and this is a classic bubble. Prices are rising to an unsustainable level," said David Wyss, chief economist at S&P.

What About Europe?

Global Property Guide reports that Latvia has been the best performing property market among all of the European countries so far this year.

Prices of standard apartments rose by 9.38 per cent based on prices published by Arco Real Estate, the research claims. It comes after Latvia suffered the worst house price crash during the global economic crisis. Prices fell by a massive 33.83 per cent in 2008, and further plunged 52.81 per cent in 2009. Finland, Norway and the United Kingdom also posted strong increases in Q2 2010.

However, a number of European countries are still in the process of recovery from the global economic crisis and have experienced slower house price falls.

These markets include Denmark, Netherlands, France, Slovakia, Spain, Poland, Russia, Iceland, Bulgaria and Lithuania.

Meanwhile, it would appear that confidence is reappearing in many of the "traditional" European property markets.

The latest figures from Primelocation International suggest that France, Italy, Portugal, Spain and the US are currently responsible for 91 per cent of all international property searches on the site.

Ann Wright, international development manager of Primelocation International said "The continuing high levels of interest in international property remain stable and there is a clear trend of potential buyers favouring the more established holiday destinations." The figure represents a marked upturn since 2008, where the above markets constituted 77 per cent of the total number of searches. Ms Wright added that there is currently a rebalancing process taking place and the ease of access, accessible cultures and well-known attractions had boosted demand for the "old favourites". "Some emerging countries such as Bulgaria and the UAE became popular during the boom years as a sector of the market looked to profit on property purchases," she adds.

"Whilst those countries are still seeing increases in searches, the downturn has served to move the market in favour of more traditional holiday home buyers and holiday lets instead of investors purely interested in a quick return."ADNFCR-3415-ID-800047928-ADNFCR

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*This page is provided for information purposes only and should not be construed as offering advice. IPIN is not licensed to give financial advice and all information provided by IPIN regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.

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