As housing markets go, Iceland is hot.
The Nordic country’s annual rate of price growth climbed 6.5% in the second quarter of 2017, according to a report Wednesday by the London-based real estate firm Knight Frank. Home prices in Iceland are now up 23.2% over the last 12 months, including a 17.8% surge in the first quarter.
Hong Kong is a close second, the report said, with a 5.8% increase in the second quarter and a 21.1% annual increase.
Although those are the only two countries that have seen prices increase more than 20%, the global outlook is still positive. Home prices in the 55 markets tracked in Knight Frank’s Global House Price Index increased by 5.6% in the second quarter.
The index looks at homes in all price ranges, and doesn’t have a specific luxury category.
In both Hong Kong and Iceland, “strong demand and limited supply are behind its strengthening prices,” Knight Frank’s Kate Everett-Allen wrote in the report. Additionally, “local buyers in Hong Kong, along with mainland Chinese investors, are keen to hedge against the yuan’s depreciation.”
Hong Kong tops the list of Asian countries for home price increases in the last year, but Knight Frank’s analysis indicates India is the leading country for longer-term growth. Prices have grown almost 70% in the last five years, as opposed to Hong Kong’s nearly 65%.
India is ninth on the index, with a 10.5% annual increase. Its second-quarter jump was small, however, at less than 1%.
New Zealand took a tumble on the list, going from third to 10th. Second-quarter prices increased just .3%, and its annual rate of increase is now at 10.4%.
Malta has taken the third spot, with a 14.6% annual increase, and other countries in the top 10 include Canada in fourth place (14.2%), the Czech Republic in fifth (12.7%) and Turkey in the sixth place slot (12.7%). Estonia and Hungary took the seventh and eighth positions, with 10.7% and 10.5% increases, respectively.
“Although five of the top 10 rankings are occupied by European countries…closer analysis shows slower performance overall,” Ms. Everett-Allen said. “In Q1 2017, 20 European countries saw their overall market’s direction improve when compared with the previous quarter. In Q2 2017 only nine fell into this bracket.”
Home prices in the U.S. were up 5.8% in the second quarter, according to the report, which is compiled quarterly using official government statistics or central bank data. The U.S. is 25th on the index.
“Economic fundamentals remain firm—unemployment is down and wages are rising—yet the number of homes for sale have declined for the past four years, indicating a tighter housing market,” Ms. Everett-Allen wrote.
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