Residential markets hit

Leading independent international property consultant Knight Frank LLP has released its respected Global House Price Index for the end of the year's first quarter.

The company, which has its Middle East headquarters in Bahrain, found the following key highlights:

Global housing markets continue to struggle against a backcloth of economic stagnation or decline and rising unemployment

Israel was the top performer over the 12-month period ending Q1 2009 recording growth of 10.9 per cent, followed by the Czech Republic at 9.9 per cent. The worst performers were Dubai and Singapore who recorded falls in average prices of, respectively, 32 per cent and 23 per cent

On a quarterly basis, the most dramatic fall in prices were recorded by Dubai (-40 per cent) and Singapore (-16.2 per cent). The best performing markets were Thailand with a 2.7 per cent uplift in values, Israel (+2.6 per cent) and Switzerland (+2.1 per cent)

Of the sources used in this index, 14 (equating to 30 per cent of the total index) had not reported Q1 data at the time of writing

The shorter term economic outlook suggests that the world's housing markets are likely to continue to suffer for the remainder of 2009.

Nick Barnes, head of international residential research, Knight Frank, said: "The world's housing markets remain under intense pressure with little real evidence of any of the hoped for 'green shoots' and even the improvement in performance shown in some countries in the last quarter may yet turn out to be a false dawn according to some commentators.

"Recent projections from the Organisation for Economic Co-operation and Development (OECD) do little to promote a more optimistic viewpoint - GDP growth is forecast to drop by an average 4.3 per cent in the OECD area in 2009 while by the end of 2010 unemployment rates in many countries will reach double figures for the first time since the early 1990s.

"The inescapable trend is that the worst and most widespread economic recession since the 1930s continues to batter housing markets across the globe. Rising unemployment and concern among those still in jobs, added to constrained credit conditions, means that buyer demand for housing remains suppressed and confidence is low in most markets which is inevitably having a negative impact on house prices.

"There is sporadic evidence of buyers snapping up relative bargains, however of those buyers in a position to move, many are still waiting for clearer signs that markets are approaching the bottom of the cycle. Moreover, in a falling market, sellers are usually forced to a greater or lesser extent which means that opportunities to buy are greatly reduced and transaction volumes correspondingly low.

"Against this backdrop, it is perhaps unsurprising that of the official sources used in the Knight Frank Global House Price Index, 14 (equating to 30 per cent of the total index) had not reported Q1 data at the time of writing this report. We can only surmise that the data collection bodies have either been unable or unwilling to publish the data to timetable - perhaps a reflection of the ailing health of their respective residential property markets?

"The latest data suggest some easing in the plight of markets. On a quarterly basis, 48 per cent of the countries from whom we received Q1 data reported a drop in prices compared to 88 per cent in our Q4 2008 index. On an annualised basis, 48 per cent of countries also showed a fall in values compared to 77 per cent in Q4.

"Given the high proportion of 'absentees' for Q1, however, it would be potentially misleading to jump to too many hasty conclusions, although over half had shown annual and/or quarterly price falls at the last time of reporting. Nonetheless, the shorter term future direction of most underlying economies suggests that the world's residential markets are likely to continue to suffer for some while."

Full details of the index can be found at www.knightfrank.com