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Published June 18, 2011

S'pore 5th in global house price index

Prices here grow 10.5% year on year; Asia ranked best-performing continent

By MICHELLE TAN


SINGAPORE came in fifth in the latest Knight Frank Global House Price Index, registering a 10.5 per cent growth in house prices year on year.

More importantly, with Asian countries taking four out of the top five spots, it is not surprising that Asia came in as the best-performing continent, registering an annual growth rate of 8.4 per cent while North America and Europe fell behind.

All that said, there were some unexpected findings.

For example, despite being fraught with financial peril, Greece and Portugal managed to show signs of improvement in their home prices, which rose 0.3 per cent and 1.8 per cent respectively over the last quarter.

On a global level, house prices appreciated by a slight 1.8 per cent in the first three months of the year, marking the lowest annual rate of growth recorded since the last quarter of 2009.

According to the Knight Frank Residential Research, 25 out of the 50 countries included in the index experienced flat to negative growth in the first quarter of 2011, as opposed to only 18 countries a year ago.

'Price growth, while not stalling, has faltered in the first quarter of 2011, pointing to ongoing problems underlying the world's housing markets,' said Liam Bailey, head of Residential Research at Knight Frank.

Mr Bailey also highlighted that the performance of the global housing market serves not only as a reflection of overall economic performance, but also responses to domestic policy decisions.

For instance, efforts by the Asian governments to cool house price inflation seem to be yielding some results.

Notably, the Chinese market has seen annual price growth ease from a whopping 49 per cent in the first quarter of last year to a more sustainable 8.4 per cent in the first quarter of 2011.

However, worries continue to persist about a potential Asian property bubble.

Mr Bailey reiterated that while many housing market experts consider the United States to represent the greatest risk to stability of global housing markets, Asia continues to be a threat.

He highlighted places such as China, Taiwan and Hong Kong could potentially become overheated should government interventions prove 'insufficient', triggering a property bubble.

In relation to the global housing outlook, Mr Bailey commented: 'We expect the current slowdown in global housing markets to continue, hitting a low point in the fourth quarter of 2011, assuming the Asian markets continue to cool and the government intervention is successful, but with a slow recovery in global house prices taking place in 2012.'