Knight Frank – Global House Price Index, 2Q 2023

The global housing market has been impacted by higher interest rates, causing a decline in the average annual rate of growth across the 56 markets tracked by Knight Frank. The rate of growth fell from a recent peak of 10.9% in Q1 2022 to 3.0% in Q2 of this year. Rising interest rates in major economies have resulted in tightened financial and credit conditions, higher borrowing rates, and a moderation in house price growth. However, there are signs of market stabilization as peak interest rates approach. Strong demographic trends in major markets, limited housing inventory, and delays in new build projects are providing support for pricing in markets like Australia, the US, and Canada. These markets have seen price growth of 2.9%, 3.7%, and 6.1% respectively in the past quarter. While there has been a marginal increase in the annual rate of growth on the index, the overall housing market conditions have not shifted significantly. Even if policy rates do not rise further, the effects of past rate hikes will continue to impact economies for some time, leading to reduced market liquidity and transactional activity well into 2024. In terms of country focus, Turkey leads the index with annual growth of 96% due to inflationary pressures. Lithuania follows with 15.3% growth, and other southeastern European countries like Croatia, Greece, and North Macedonia also feature in the top five spots. On the other hand, South Korea, Sweden, Finland, New Zealand, and Hong Kong are experiencing the largest rates of price falls. Although there have been substantial price falls in some G20 countries and a decline in housing investment, there are some signs of stabilization in recent monthly data. However, a full recovery in the housing market is still a long way off. The 3.0% average rate of growth recorded in the most recent quarter is the lowest since Q3 2015.