Dubai trumps global property price growth
Photo credit: Chusico
Dubai continues to be the best-performing property market on the planet, according to Knight Frank, whose Global House Price index has been topped by the emirate for four quarters in a row.
The <a href="http://my.knightfrank.com/research-reports/global-house-price-index.aspx">Global House Price Index</a> has risen for eight consecutive quarters, confirming the real estate recovery now taking hold worldwide, although the rate of price growth slowed in the first three months of 2014.
Indeed, property prices climbed 0.6 per cent in the first three months of 2014 compared to 1.2 per cent in the last quarter of 2013. Nonetheless, the index still recorded year-on-year growth of 7.1 per cent.
Knight Frank notes that part of the trend is seasonal, as the start of a New Year is always quieter in the wake of a rush to complete sales before the end of the calendar year. That impacted markets across the globe, with US property prices slowing down to grow by 10.4 per cent annually compared to 11.3 per cent last quarter.
The US, Australian and Icelandic housing markets have all enjoyed turnarounds, though, which is evident from all three countries appearing in the top 10 rankings for annual price growth alongside key emerging markets such as China, Turkey and Brazil.
European markets, on the other hand, struggled significantly, despite some improvement.
"The bottom ten rankings reads like a geographical tour of Eastern and Southern Europe," says Knight Frank. Indeed, 14 countries recorded a decline in house prices year-on-year; 12 of these were in Europe.
"House prices here, while still in decline, are now falling at a slower rate, even in the weakest housing markets such as Croatia, Cyprus and Greece," adds the report.
Singapore and Japan were the only non-European countries in the bottom 14 rankings thanks to cooling measures and tighter mortgage lending in Singapore, while house price growth has not yet exploded in Japan.
Overall, though, the picture is broadly positive. For the first time since 2008, no single country tracked by the Global House Price Index has recorded an annual price fall in excess if 10 per cent.
Dubai is the most positive of all, clocking up a price growth of 27.7 per cent in the year to the end of March - par for the course for the recovering emirate, which has seen values soar in the past 12 months.
Confidence in Dubai real estate has prompted investors to flock to the perceived safe haven and take advantage of both rising capital values and high rental incomes. Indeed, Donald Trump has <a href="http://www.propertyshowrooms.com/united%20arab%20emirates/property/news/donald-trump-predicts-stellar-performance-for-dubai-property_313133.html">just announced</a> a new mega-development in Dubai, saying that property there is "going one way: it's going way up".
Nonetheless, Dubai has also followed the wider trend of slowing down this year, as experts fearing a potential bubble introduced cooling measures in 2013, such as a cap on lending and higher transfer fees, to dampen speculative activity.
Dubai property prices rose by a slower 3.4 per cent in the first three months of 2014, evidence that the doubling of transfer fees and the mortgage cap are already having an impact.
Donald, though, remains sure that Dubai will trump the global property markets for some time to come.
"These numbers are much lower than the numbers from years ago prior to collapse," he told online press.
Knight Frank, meanwhile, predicts further improvement ahead for global prices overall: "We expect to see the index’s performance strengthen again in the second quarter. All eyes will remain on central banks, in particular the Federal Reserve, the Bank of England and the European Central Bank. The issue is not when interest rates rise but the speed and extent to which they do."