Recovery prospects high as global house price boom jumps in Q1 2014

Global house price boom which happened in most markets in 2013 gathered pace in the first quarter of this year (Q1 2014) and averaged 20 percent price rise, raising prospects of recovery for the markets that literally went on their knees during the global economic recession. Within this period, prices rose in 31 of the 45 housing markets which have so far published housing statistics, and it was observed that while prices were rising in 33 countries, it was unchanged in one country, and falling in only 11 countries.

Global Property Guide, a research house and website dedicated to residential property, covering market trends in 101 countries, gave this hint in its survey of official house price statistics for Q1 2014. Its research and surveys serve as investment compass for investors desirous of putting their money where there is high and quick return on investment. The surveys also serve as performance indicators of housing markets and the global economy.

The research house notes that despite strongly rising housing markets in Taiwan and the Philippines, the momentum seems to be passing momentarily from Asia, where interventionist authorities have slowed housing markets in Hong Kong, Singapore and China, adding that instead, action is shifting to the Pacific, the Gulf, and (less forcefully) to Europe, which are all seeing strong price rises.

In the two strong markets in Africa – Nigeria and South Africa – the experience is mixed. In Nigeria, in spite of the wide housing demand-supply gap, house price rise happened in just a few locations. The property market has been experiencing a slowdown, particularly in the northern part of the country where security issues have brought economic activities to near-zero level.

In the southern part of the country, notably Lagos and Port Harcourt, prices went up significantly within the period under review. In Port Harcourt where Taf Nigeria Homes Limited is developing 750 mixed luxury residential housing units, the prices of the units went up by as much as 20 percent.

“When we started barely 15 months ago, our two-bedroom apartments were sold for N12 million each, but today, they are sold for N15.5 million; the three-bedroom started at N19 million, today it is N25.5 million; the town houses are already in secondary market and are selling for N58 million, up from N35 million; the villas which we sold at N65 million are today valued at N85 million per unit,” Mustapha Njie, CEO of Taf Nigeria Homes, disclosed recently.

In Banana Island, the most expensive location in Lagos, a standard plot of land measuring 1,000 square metres sells for N250 million, up from N200 million a year earlier. Similarly, a well-finished five-bedroom duplex at the same location now sells for N450 million to N500 million, up from N350 million to N400 million the previous year.

Global Property Guide reveals that South Africa’s housing market remains weak such that the price index for medium-sized apartments increased only 0.89 percent during the year to Q1 2014, in contrast to the annual declines of 1.34 percent in Q4 and 2.32 percent in Q3 2013. It points out, however, that on a quarterly basis, house prices dropped by 0.04 percent during the latest quarter.

House prices in South Africa declined by 15.5 percent during the global financial crisis from Q4 2007 to Q2 2009. After a short-lived recovery in 2010, they dropped again by 7 percent from Q1 2011 to Q2 2012. Between Q4 2012 and Q2 2013, house prices increased by 2.2 percent.

For Nigerians who intend to invest in Europe and those who have already invested, it is good news that more European housing markets are now booming. In Ireland, for instance, residential property prices rose by 7.49 percent during the year to Q1 2014, in sharp contrast with the year-on-year decline of 3.49 percent seen a year earlier. United Kingdom house prices rose by 7.35 percent year-on-year in Q1 2014, contrasting the annual decline of 2.52 percent the previous year.

Dubai, which remains a haven for global investors, especially Nigerians, has had a spectacular performance over the past two-and-a-half years. Its latest performance was an amazing 31.57 percent annual house price rise during the past year to Q1 2014. Property demand is surging and the economy remains strong, making it an irresistible destination for investment.

Chuka Uroko