Worldwide Housing Price Roundup

Global house price downturn accelerates: Q1 2012

During the latest quarter the downturn appears to have accelerated, with house price falls in 26 countries, and house price gains in only 10. In nominal terms only 16 countries experienced house price falls during the year, while 20 countries recorded house price rises. But the Global Property Guide's statistical presentation uses price changes after inflation, giving a more realistic picture than the more upbeat nominal figures usually preferred by real estate agents.

Europe is deteriorating faster. (There's a surprise.)
The correction continues to maul inhabitants of one of the most absurd bubbles: Ireland is down 19% year on year after falling 13% the year before. That's what massive oversupply will do to a market on the downside. On the upside all those houses are just more poker chips for the table. The extra houses do nothing to stem the bubble being blown because people are not buying out of a need for shelter. The sight of all the construction only seems to add to the frenzy.

There was also an alarming increase in momentum of house-price declines in Athens, Greece (-11.68%); in Warsaw, Poland (-10.94%); in Portugal (-10.45%); in Spain (-9%); in the Netherlands (-6.05%); and in the Slovak Republic (-5.89%). All saw bigger house-price declines this year than the previous year.

Netherlands was a bit of a sleeper in that the correction was long delayed. A big banking country that blew prices up 80% over from 96 to 2001, 111% in Amsterdam over that time. (source)
India-Delhi appears to have topped out, the rocket drifting on the wind way up high.

OECD and Deutsche Bank Rank the Most Overvalued Countries

The Most Overpriced Housing Markets In The Developed World
Country - Over valued by:
Italy - 10%
Denmark - 17%
Finland - 22%
Sweden - 25%
Spain - 33%
UK - 34%
Netherlands - 36%
Australia - 39%
France - 42%
New Zealand - 44%
Norway - 48%
Canada - 54%
Belgium - 56%

I don't actually agree with this analysis that the U.S. is 9% undervalued. I would have put it at 7-8% overvalued. But given the wide differences between markets, it probably comes down to the weightings. For example, because Las Vegas and Arizona overbuilt without regard to lower population, many of those houses simply shouldn't count in the analysis. Also, if they are using average incomes, that completely ignores that most of the gains in the last decade went to the top few percent and isn't available to the middle class at large to invest. But this isn't about places finding a bottom. It's about those that are doing an excellent impression of Wile E Coyote.

Checking in on Other Housing Bubbles

The wonderful Economist continues to update their Clicks and Mortar interactive chart.

Compared to rents, let's take a look at who is the most vulnerable.

Elevated house prices relative to rents: Britain, France, Sweden, Australia, Canada

If the markets continue their plummet (for a quick sobering up, see Turning Japanese: SPX vs Nikkei Index (10 Year Lag)) a second looming credit crisis is going to be felt disproportionately by some consumers, specifically in countries with elevated house prices.

The U.S. and Ireland have almost worked through their house price correction. Others are still flying high on Icarus wings.

On another note, I've been seeing lots of articles with this spin:
Slow stock markets help fuel Asian real estate boom
Especially in Australia. Is the investment market so distorted by policy that this is more than wishful thinking? Were they all asleep in 2008 when the credit bubble that fueled the price gains in the first place popped and the spattered remains froze and shattered? We're still in the same crisis, guys. I've been pondering the thesis in these articles, but just can't see it as anything other than belief in a fairy godmother.

Other Housing Bubble Areas of the World

According to Global Property Guide's handy chart of inflation-adjusted price changes year over year, other places to watch for bubble action are:

Singapore at 35%
Hong Kong at 21%
Taiwan at 12%
Latvia at 9%
Israel at 9%
Finland at 9%

Global Property Guide has Australia at 15% (inflation adjusted) and Canada at 3% (nominal) in contrast to Greater Vancouver at 5.5% growth year over year according to the Greater Vancouver Real Estate Board September 2010 report.