Home Prices Head Up In More Countries

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House price rises are rippling across the leading global markets, according to new research from The Economist.

Tracking home values is 23 countries, the data shows prices are up in 18 – six more than the 12 showing increases 12 months ago.

The United States leads the way with a 13.6% average price rise for the year to the end of October.

The index shows homes have clawed back 25% of the loss they suffered during the recession years, but still sit at 20% under the peak prices of April 2006, says the magazine study.

However, the market looks buoyant as foundations went down on a million new homes in November.

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This is still short of the January 2006 high of 2.5 million home starts and the average trend of 1.5 million.

The Economist House Price Tracker is one of the only surveys comparing house prices with rents and incomes, indicating whether homes are over or under priced against household earnings.

The figures suggest buying or renting a home in Germany is much more affordable than in Britain, as German rents and wages are way below housing costs – whereas the opposite is the case in Britain.

“Prices in Britain increased at their fastest rate for three years in October, fuelling fears of a housing bubble and subsequent crash, particularly in London where prices increased by 12%,” said the report.

“Although by our measure housing is overvalued against both rents and income, Britain did not suffer a housing crash on the scale of America’s, largely because supply is so tight.”

The Economist House Price Indicators
 

Latest % change

Under or overvalued against*:

 

Year on year

Since Q1 2008

Rents

Income!

United States

13.6

-5.9

5

-10

Brazil

12.8

Hong Kong

9.7

96.3

81

China

8.7

23.0

7

-37

New Zealand

8.7

9.1

71

26

South Africa

8.1

23.4

3

Germany

8.1

25.2

-12

-17

Australia

7.6

17.6

49

26

India

7.0

Ireland

5.6

-45.3

-2

-8

Britain

5.5

1.7

36

26

Austria

5.0

37.1

13

16

Switzerland

5.0

27.8

2

-4

Singapore

3.9

22.1

58

Canada

3.4

23.0

76

31

Sweden

3.1

11.8

32

17

Denmark

2.7

-16.0

12

8

Belgium

2.4

15.5

62

49

France

-1.5

-0.4

33

29

Japan

-1.6

-15.4

-37

-38

Netherlands

-4.8

-19.2

3

19

Spain

-5.3

-30.0

13

10

Italy

-5.9

-12.2

-4

10

*Relative to long-run average

!Disposable income per person

Sources: Haver Analytics; Hong Kong RV; National Housing Bank; Thomson Reuters; OECD; Standard & Poor’s; Teranet and National Bank; National statistics offices and The Economist

 

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