Find out what’s happening in the property investment arena both in the UK and internationally
The global housing market goes from strength to strength
December 4, 2015Article by Charlotte Ashton
Two of the most important indicators of the health of the global housing market are the Knight Frank Global House Price Index and the Economist House Price Index. With both of the latest versions reporting positive growth, the picture is looking good for the global housing market.
Watching the US
The Knight Frank index reports an increase in prices of 2.7% in the year to September 2015, with 82% of the 55 housing markets tracked reporting positive growth (up from 75% last quarter). Ray Withers, CEO of specialist property investment company Property Frontiers, comments,
“The Knight Frank index is always a reliable indication of the health of the real estate market around the world. This quarter the focus is very much on the likely US rate hike and its impact – both on the US housing market and on those currencies pegged to the dollar. US prices have increased by 4.9% on average in the year to September 2015, with the stable market attracting investors from around the globe.”
Buy-to-let opportunities in the US, such as Circle Oaks Village, 20 minute from Charlotte in North Carolina, exemplifies why investors are so keen to be part of the US market. The fully refurbished and immediately tenanted properties are available from $88,224, with minimum 18.8% NET per annum assured for 5 years.
As the world’s largest economy, the performance of the US and its housing market is of huge global significance. According to CNN Money, the US economy is currently worth $18.1 trillion. The next biggest is China, at $11.2 trillion. But the CNN projections show the US streaking ahead over the coming five years, increasing to $22.5 trillion by 2020, compared to China’s projected $16.2 trillion.
Germany is also facing significant growth, according to the CNN Money data, with its economy tipped to grow from $3.4 trillion in 2015 to $4.1 trillion in 2020. The Knight Frank House Price Index also shows positive news for Germany, with house prices up 4.7% in the year to September 2015.
It is this European residential real estate market that will bear watching over the year ahead, according to Savills, with foreign investors contributing to what is predicted to be a record fourth quarter, with European turnover reaching €234bn by the end of the year.
Rents are also due to grow, according to Savills, with increases of between 2.5% and 3% over the course of 2016. The figures make investing in strong European markets such as Germany particularly attractive. At Stadtpark Steglitz in Berlin, buy-to-let apartments are available to invest from €153,670 with up to 5.6% yield and excellent capital growth expected.
The second opinion
The news from the Economist House Price Index confirms the positive tale. The data shows global prices rising at a median pace of 4.7%. Of the 26 markets tracked, prices are falling in only five of them. With so many countries experiencing positive growth, 2016 could shape up to be a bumper year for the global property market.