Q3 Data Shows International Property Markets Struggling
06 December 2011
The Global Property Guide has just published its after-inflation index for the third quarter, and it unsurprisingly talks of poor performance almost across the board, with Europe being among the worst which is probably the farthest thing from a surprise.
What did surprise me was its data on India. For a few months now I have been reporting on the negative performance of India, with an increase in lending costs and falling sales exposing just how badly overleveraged many developers are. Indian investors overtook Chinese buyers in London last month, as they take their money out of what is becoming a high risk property market in their own country.
Yet according to GPG along with Brazil, the Indian property market is a BRIC outperformer in Q3 data. The report says:
"India and Brazil's housing markets have continued their spectacular outperformance, with Delhi house prices up 22.68% during the year to Q3 2011, according to National Housing Bank (NHB) figures. There were strong house price increases in almost all India's major cities, reflecting the country's current high rate of consumer price inflation, despite a drop in demand resulting from the repo rate hike in October (currently at 8.50%), the 13th since March 2010, making home loans costlier."
We can only expect that rising borrowing costs are going to take longer to cool price inflation, but if China is anything to go by then it will come. Brazil on the other hand is 5/5 and, along with Turkey is one of the very few places in the world that currently looks like a good and safe place to invest in property -- save the few prime locations like Paris and London.
And it is not all bad in Europe either. While Asia is seeing a worse performance, parts of Europe are picking up. In fact, according to the data the second strongest quarter on quarter growth was in Vienna. Latvia was the third best performer in terms of annual growth, and Estonia is also recovering well from a 3 year decline. Norway, France and Switzerland are also performing well, although the latter two will be expected by many.
The full table is below.