Turkey’s housing market has outperformed other countries for the fifth consecutive quarter, with prices increasing 13.9% year-over-year from July to September , according to a market report released Wednesday.
In its Global House Price Index for the third quarter of 2016, Knight Frank said prices rose in 44 of 55 countries it tracked over the past year—translating to 80%—and resulting in a 5.3% increase in the weighted index.
More:Click to read Mansion Global's Market Spotlight on Turkey
Other findings from the report include:
The Global House Price Index increased 5.3% in the year to September, the highest rate for two years. Turkey saw the largest annual price increase at 13.9%. New Zealand was close behind with a 13.5% increase year-over-year. The U.S. house price average exceeded the pre-financial crisis peak in 2006. Prices in the U.K. increased at a global average, underpinned by shortage in supply and low mortgage rates. Taiwan, Hong Kong and Singapore reported negative annual price increases.
Five countries saw double-digit prices increase
In the third quarter, 9% of countries recorded double-digit annual price growth, including Turkey (13.9%), New Zealand (13.5%), Iceland (12.9%), Canada (11.7%) and Lithuania (10%). In comparison, 22% of countries fell into this category three years ago, according to Knight Frank.
Turkey topped the Global House Price Index for the fifth consecutive quarter. However, compared with the second quarter, the average price only increased 3.5%. The slower pace is likely to cost that country the top spot next quarter, giving way to New Zealand or Iceland, with annual growth of 13.5% and 12.9% respectively.
"Political and economic volatility, partly due to currency and security concerns, have cooled investor interest in Turkey," said Kate Everett-Allen, partner at Knight Frank’s International Residential Research and author of the report. "New Zealand's prices have been driven by strong immigration, low interest rates and limited supply."
Iceland, in particular, saw a 6% price increase in the three months from July to September, promoting the country from the eighth place in the second quarter to the third.
| Rank | Country | 12-month % change | 3-month % change |
| 1 | Turkey | 13.90% | 3.50% |
| 2 | New Zealand | 13.50% | 5.80% |
| 3 | Iceland | 12.90% | 6.00% |
| 4 | Canada | 11.70% | 4.30% |
| 5 | Lithuania | 10.00% | -1.10% |
U.S. and U.K. house markets remained active
Political and economic uncertainties in both the U.S. and U.K. failed to slow down the house markets, with prices increasing 5.5% and 5.4% respectively.
Furthermore, the U.S. house market set two periodical records in September: an 0.8% month-on-month increase was the largest since August 2013 while the U.S. house index exceeded its previous peak in July 2006.
The U.S. housing market looks to remain robust in 2017, said Ms. Everett-Allen.
"Low interest rates continue to underpin demand, and although a rate rise is expected in early 2017, given the anticipated new fiscal stimulus measures (aimed at improving economic growth and incomes) as well as tight inventory levels, we expect the U.S. housing market to see continued growth in 2017," she told Mansion Global in an email.
Meanwhile, the U.K. economy has shown resilience following the vote to leave the European Union in June. House prices increased 1.3% in the third quarter, mainly due to a shortage of supply and low mortgage rates.
| Rank | Country | 12-month % change | 3-month % change |
| 24 | United States | 5.50% | 1.50% |
| 25 | United Kingdom | 5.40% | 1.30% |
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China, Hong Kong took measures to cool markets
Led by its largest cities, house prices continued to soar in China, where a growth rate at 9.3% in the third quarter earned the country eighth place in Knight Frank’s Global House Price Index. In the previous quarter, China ranked No. 20 with a 5.9% annual growth rate.
To stem the rapid increase in prices, more than 20 Chinese cities have introduced new tightening since September.
Specifically, house prices in Hong Kong were down 5.5% year-over-year in the third quarter, but they accelerated 4.8% between June and September. The Hong Kong government acted quickly, increasing stamp duty to 15% for residents and non-residents alike (excluding first-time buyers) in early November.
The cooling measures were expected to slow down residential sales in the short term, but house prices in Hong Kong are expected to stay stable, according to previous reports.
| Rank | Country/Region | 12-month % change | 3-month % change |
| 8 | China | 9.30% | 4.20% |
| 53 | Hong Kong | -5.50% | 4.80% |
Write to Fang Block at fang.block@dowjones.com