Australia has defied predictions from the Reserve Bank by moving up 46 places on the annual Knight Frank Global House Price Index. In fact, a number of countries have shown massive movement up and down the list, primarily due to COVID-19 shocks. The data showed COVID-19 hit sales volumes rather than prices as the pandemic peaked in Asia but was yet to take its toll on many parts of Europe and South America.
Australia was one of the biggest movers: the country ranked 10th on the list with prices rising on average by 8.6% behind the likes of Turkey with a 15% increase, New Zealand with 14.5% and Lithuania with 13.8%.
Knight Frank head of residential research Michelle Ciesielski said it was unlikely that sellers would lower asking prices significantly given low interest rates and the introduction of the mortgage holiday slowing distressed sales.
“Price growth was ramping up significantly prior to COVID-19 following a lull in activity off-the-back of a market correction and hesitation with a federal election and several state elections being held, while adapting to new responsible lending compliance,” Ciesielski said. “Australia was in 10th position registering a punchy 8.6 per cent annual growth in the first quarter of 2020, up from 5.3 per cent in the fourth quarter of 2019 when in 24th position.”
In Australia, auction clearance rates had improved to above 55% in recent weeks however the impact of new COVID-19 cases and restrictions in Victoria was yet to affect the data.
Top 10 countries for house price growth
|2020 Q1 Rank||Country||12-month-change||2019 Q1 Rank||12-month-change|
“Surprisingly, of the 56 countries and territories tracked, only one saw prices decline year-on-year, Finland and only by 1.2 per cent,” Ciesielski said. “Since we first started the index in 2008, this represents the highest proportion (98 per cent) of countries registering positive price growth on an annual basis.”
Places with a low cost of living showed the most growth in house prices when this report was compared to Mercer’s 2020 cost of living ranking.
Hong Kong topped the cost of living list however house price growth was only 2.1%, similarly for third placed Tokyo where house prices increased 3.7%across the country.
According to the Mercer report Australian cities fell in the ranking this year because the local currency depreciated against the US dollar.