Photo: ALEXANDRE LALLEMAND on UnsplashThe prices of residential real estate are visibly falling all over the world, is the main conclusion of the analysis of the Internet portal Global Property Guide. Looking only at nominal prices, they rose in the second quarter of this year in 49 of the 58 countries monitored by this portal, but inflation pushed many real estate markets into the red.
After the recalculation of nominal prices, residential real estate became cheaper on an annual basis in as many as 24 countries, while in 34 countries real estate rose in real terms. All this means that in the second quarter the real estate markets have cooled significantly. Only in 12 countries did real estate prices rise more than in the same period in 2021.
The aforementioned price movements show that the global real estate boom is losing momentum. This is not surprising, because the war in Ukraine and the uncertainty caused by the covid-19 pandemic are affecting this market, in addition to rising inflation.
UNITED STATES
In the United States of America, the world's most important real estate market, nominal price growth was calculated in the second quarter, but it was significantly lower than in the same period last year. Analysts attribute the reason to lower demand and lower expectations of investors of housing projects.
In July of this year, the sale of second-hand apartments there fell by a good fifth, and residential houses by almost a third. Investor expectations for housing projects fell for the eighth month in a row and are the lowest since May 2020.
BAD PREDICTIONS
Due to very high inflationary pressures, central banks around the world are raising interest rates. Inflation reduces the purchasing power of citizens, and rising interest rates raise the costs of financing and repaying mortgage loans. For all these reasons, real estate analysts' concerns are fully justified. On the mentioned web portal, they wrote that this is a recipe for the collapse of the real estate market. To this must be added the very uncertain forecasts regarding the world economy and the great risks due to the war in Ukraine.
In Europe, the growth of residential real estate prices is sharply decreasing. In only seven out of 27 European countries did prices rise more this year than last year. The mentioned internet portal points out that the two main European markets, German and British, cooled down in the second quarter, because the price growth this year was lower than last year. In Italy and Spain, however, real estate prices even fell.
In the second quarter, however, prices rose significantly in real terms in Iceland, almost 13%, and in Slovakia, where the growth was 11.6 percent. They are followed by: Portugal, the Netherlands and North Macedonia, where prices rose by 7 to slightly less than 9% in real terms. Viennese residential real estate rose in price by 4.8% in one year.
GERMANY AND GREAT BRITAIN
Markets in Germany and Great Britain are cooling down. A German decline in price growth was recorded in the second quarter. Last year's annual price growth in the second quarter amounted to almost 12%, and in the second quarter of this year, residential real estate prices rose only 2.2% on an annual basis. This is also the biggest reduction in price growth in the last four years. At the quarterly level, real prices fell by 1.2%.
Things are less dramatic on the island, as prices rose 3.2% year-on-year in the second quarter of this year, compared to 8% last year. At the quarterly level, prices there fell by 0.7%. Analysts highlight high, more than 10% annual inflation and nominal prices, which have grown by a good 11% annually.
THE WORST IN WARSAW
In Europe, it is worst in Poland, in Warsaw. While the prices there in the second quarter of last year rose in real terms by 4.5% on an annual basis, this year they calculated a drop of 7.6%. In three months, prices fell by 2.7%. The turnaround on an annual basis also occurred in Spain, where prices rose by 7.1% in the second quarter of last year, and fell by 6.27% this year. It was similar in Italy, only last year real annual growth was 1%, this year in the second quarter real estate prices fell by more than 6%.
ASIA, SOUTH AMERICA
Asian markets strengthened with the exception of Vietnam, Taiwan and Japan, while in South America price growth stopped in most countries. A very interesting story continues in Turkey, which has almost 80% annual inflation, the highest in the last 24 years. In nominal terms, prices there have risen a whopping 161% year-on-year. Equally, if not more so, the nominal growth in real estate prices was incredible, amounting to almost 46%. Last year, they recorded a growth of slightly less than 10%.
Source: blic.rs
