The world is two-tiered when it comes to home prices, with most of Europe and North America still showing strong growth, while Asia and the Middle East are slowing sharply, according to a new report.
The biggest overall winner is Turkey, whose home prices increased by a record 19.05% in the first quarter of 2016 from the same three-month period in 2015. Its annual growth this time last year was 11.61%, according to the Global Property Guide’s survey released Tuesday. On the other end, the biggest loser was Russia, where prices declined 13.04% year-over-year, after falling 9.65% in 2015.
Global Property Guide attributes Turkey’s performance to both “strong foreign investment and growing population,” which made up for a collapsing currency, rising social unrest and chaos in neighboring Syria and Iraq.
Home prices in Turkey have risen by an average of 6.1% annually from 2012 to 2014, after plummeting 29% from 2007 to 2011 due to a sharp economic slowdown. The economy is projected to grow by 3.8% this year and by another 3.4% in 2017, according to the International Monetary Fund.
Yet, in April 2016, house sales in Turkey decreased by 10.9% compared with April 2015 to represent a total of 106,348, according to data by the Turkish Statistical Institute. Sales to foreigners decreased 14.4% to 1,581 units.
Still, the decline of the Turkish lira—which is down 11.2% against the euro and 9.9% versus the U.S. dollar—continues to make homes more affordable and attractive to foreign buyers, noted the Global Property Guide’s survey.
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Russia sees decline
Russia, the other side of the coin, is suffering from low oil prices, a plunge in value of the ruble and its steepest economic contraction since 2009. The government expects the economy will contract by 1.8% this year.
For foreign buyers, the price decline is even deeper since the ruble has lost almost half of its value against the U.S. dollar and 36% versus the euro since May 2014.
In a November overview of the country, Global Property Report cited a report by irn.ru showing discounts of 10% and 15% in residential developments in Moscow and of up to 36% in luxury condominiums.
All told, Europe continues to be one of the strongest housing regions. Prices rose in 18 of the 22 markets surveyed, including Sweden, Romania, and Ireland.
Surge in Shanghai, unlike other parts of Asia
The picture is less positive in Asia. While prices are still going up in several of the 11 countries for which figures were available, increases were more modest and prices fell in five markets, including Hong Kong (-9.91%) and Taiwan (-7.65%).
The only Asian market with stellar growth was China. House prices in Shanghai surged by 16.64% year-over-year in the first quarter of 2016, compared with a 2.9% decline a year before.
Global Property Guide warns, though, that China’s strong increases mask a high inventory amid a slowing economy and developer’s high debt levels.
Portland leads the way in North America
North America, for its part, remains strong. House prices continue to rise in all 20 U.S. major cities, according to the Case-Shiller Index. Portland leads the way, with an inflation-adjusted year-over-year increase of 11.34% in the first quarter. Likewise, values in Canada’s 11 major cities rose by 5.67%, with Vancouver on top with an inflation-adjusted growth of 15.8%. Finally, the nationwide house price index in Mexico rose by 5.26%, boosted especially by its two neighbors’ rising demand.
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Weakening markets in the Middle East, New Zealand and South Africa
In the Middle East, all four housing markets included in the survey performed worse than last year. Qatar posted a yearly increase of 9.27% in the first quarter, after rising 27.81% last year. Prices in Dubai continued to fall. After an annual decline of 2.72% in the first quarter of last year, home prices plunged by 9.26% in the first three months of 2016.
Two other weakening markets are New Zealand and South Africa. The latter’s price index for medium-sized apartments fell by 1.3% during the year to the first quarter, versus an increase of 1.52% a year earlier. House prices are expected to continue to fall in the rest of the year, amid a weakening rand, falling investor confidence, and uncertain economic condition, says the survey.
The nationwide median house price rose by 3.36% in New Zealand, a sharp slowdown from a 7.85% increase in the first quarter of 2015.
In all, 31 out of 45 housing markets surveyed saw home inflation-adjusted prices rise until the end of the first quarter, while only 21 showed faster growth than last year.