Global Real Estate Is Booming With Great Housing Deals Abroad
Even in the United States, where the housing market has been performing well, yields are higher in overseas real estate.
Global real estate is booming which means that the great deals are abroad. After a quiet period, and for some countries, a critical one, housing prices in Europe and Asia are started to surge. According to the research firm Global Property Guide, 18 of the 23 European housing markets boomed in 2016. For global real estate funds, double-digit performance is now a practice.
Even in the United States, where the housing market has been performing well, yields are higher on overseas real estate ETFs than on US -focused property funds. For the most optimistic analysts, global real estate stocks have much more room for price growth. The best performers and those countries that continue to experience strong price rises include: Europe, Hong Kong, China and Canada.
Not everybody is joining the club per se. The global housing boom now appears to be losing momentum, with most of the Middle East, Latin America, and some parts of Asia experiencing either house price falls or a rapid deceleration of house price rises.
The five strongest housing markets in our global house price survey for the first quarter of 2017 were:
- Hong Kong (+17.27%)
- Iceland (+16.01%)
- China (+13.16%)
- Canada (+11.7%)
- Ireland (+8.91%)
According to Global Property Guide, during Q1, 2017 house prices rose in 27 out of 45 of the world’s housing markets which so far have published housing statistics – using inflation-adjusted figures. The more upbeat nominal figures showed house price rises in 34 countries, and declines in 11 countries. For those curious about the countries with the biggest decline, the survey includes: Egypt (-16.68%), Qatar (-10.63%), Russia (-8.33%), Macedonia (-7.92%), and Puerto Rico (-6.96%).
Let’s focus on Europe since rising housing prices continue to be unstoppable. Six out of the ten strongest housing markets in the global property guide survey are located in this region.
- Ireland: the housing market is fueled by vibrant economic growth. Residential property prices were up by 8.91% during the year to Q1 2017.
- Montenegro: a surprise for sure, as it was the weakest housing market in the previous quarter’s global survey. The price in new residential buildings soared to 8.68% in Q1 2017.
- Romania: the country shows a steady performance with the average selling price of apartments rising by 7.61% during the year to Q1 2017.
- Norway: the house price index rose by 7.38% during the year to Q1 2017. This is by far, the strongest rise since Q1 2010 for the Norwegians.
- The Netherlands: this is yet another example of a steady and strong housing market, despite moderate economic growth. The average purchase price rose by 7.11% during the year to Q1 2017 (it is the strongest rise in 16 years).
Finally, when it comes to the housing market in Asia, Hong Kong and China are among the best performers in the global house price survey. In fact, Hong Kong was the world’s strongest housing market during the year to Q1 2017. Residential property prices surged by 17.27%. In second place is China who continues to experience double-digit house price rises. In Shanghai the price index of second-hand houses rose by 13.16% during the year to Q1 2017. The Philippines comes in third with strong price rises – a pattern witnessed within the past six years.
Neena Mishra, director of ETF Research at Zacks Investment Research, stated, “I think the main reason why investors should consider adding some international real estate exposure in their portfolios is the diversification benefits.”
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