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(File pix) Malaysia moved to 25th from 28th quarter-on-quarter on Knight Frank’s Global House Price Index 2017. Pix by Aizuddin Saad

MALAYSIA has climbed to 25th on Knight Frank’s Global House Price Index for the third quarter of last year. The country moved from 28th in the last quarter.

The index showed that the country’s 5.1 per cent change for the twelve months (Q3 2016-Q3 2017) performed better than neighbouring countries, especially Indonesia which had 3.3 per cent change and ranked 38th on the index. Singapore — which had -0.3 per cent change — ranked 52nd. However, the direction of annual price growth compared to previous quarter for both Indonesia and Singapore showed an upward trend.

The Knight Frank index tracks housing market performance in 56 countries.

The main point from the third quarter data is slower growth. Overall, the index increased 5.1 per cent in the year to September, down from 6.3 per cent growth in the previous quarter. This represents the index’s lowest rate of annual growth since the start of 2016.

Though nearly nine in every 10 of the countries tracked by the index recorded positive annual price growth in the nine months to September last year, almost half saw their rate of annual growth decline compared with the previous quarter.

The trend was most evident in the fastest growing countries, whereby out of the 15 countries, 13 saw their rates of growth drop.

“The shift was most evident at the top of the rankings table. Thirteen of the 15 strongest performing housing markets around the world registered a slowdown in their rate of annual growth in the year to September,” said Knight Frank International residential research head Kate Everett-Allen.

Iceland led the annual rankings with average prices ending the year to September 20.4 per cent higher, down from 23.2 per cent in the second quarter. Iceland has now topped the annual rankings for four consecutive quarters.

Hong Kong has clung on to second place, but data from the Hong Kong Ratings and Valuation Department showed price growth equated to only 1.7 per cent in the three months to September.

Estonia, Hungary and New Zealand have dropped out of the top 10 in the third quarter index. New Zealand slipped from 10th to 27th place as annualised price growth slipped from 10.4 per cent to 5.2 per cent. Tighter lending conditions and plans to introduce a ban on foreign investors this year have potentially reduced some of the speculative activity in the market.

The third quarter of last year marked the inclusion of Saudi Arabia within the index for the first time. Latest data showed prices slipped 5.4 per cent on an annual basis meaning it is second only to Ukraine as the weakest-performing market. The oil-dependent Saudi economy is struggling to gain traction, which along with the recent introduction of a levy on expatriate workers is stifling housing demand.

The United States and the United Kingdom are following different trajectories, mirroring their economic performance. Average prices in the US accelerated 6.2 per cent over the 12-month period, up from 5.8 per cent last quarter while the UK had incurred a marginal dip from 2.8 to 2.6 per cent. The UK market remains highly localised with affordability a key concern in many markets.

China has slipped from 12th to 19th position in the rankings, as tighter capital controls take effect. House prices are now rising at their slowest rate for five quarters, up by 6.5 per cent on an annual basis, according to the National Bureau of Statistics.

European housing markets, meanwhile, are firmly back in the spotlight. On average, the region recorded 5.6 per cent annual price growth in the year to September, up from 2.3 per cent three years ago. The good news for Europe doesn’t end there. Greece (0.7 per cent) may finally see price growth reach positive territory over the next quarter after nine years of negative annual growth.

Despite Europe’s recent recovery, analysis over a five- and 10-year period underlines the extent to which countries within Asia Pacific still rank among the highest performers.

“Looking forward, expectations of rising interest rates in a number of markets would continue to lead to some downward pressure on pricing, although with regional economic growth remaining strong, underlying fundamentals in many markets remain robust,” says Knight Frank head of research for Asia Pacific Nicholas Holt.

Over the past five years to the third quarter of last year the Asia Pacific region had dominated price growth led by India (76.1 per cent), Hong Kong (60.1 per cent) and New Zealand (56 per cent), Malaysia (48.6 per cent) and Australia (45.9 per cent).

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