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Economic uncertainty filters into global house prices

House prices across the 55 housing markets tracked in the Knight Frank Global House Price Index (Q1 2016) grew by 3.4% on average in the 12 months to March 2016. However, the firm says that the statistics reveal that a number of the top performing markets are starting to cool.

Turkey, which leads the annual rankings for the fourth consecutive quarter, has seen its rate of annual growth decline from 18% last quarter to 15%. Security concerns, Russian sanctions and mounting pressures on the Turkish Lira are curtailing investment despite high demand and low supply characterising the wider property market.

Other strong performers such as Australia and New Zealand have also seen price growth moderate. Despite Australia’s recent rate cut to 1.75% prices are unlikely to keep growing at the same rate given mortgage debt is at a record high relative to income and December 2015 saw the introduction of new fees for foreign buyers.

House prices in New Zealand increased 11% year-on-year but have slipped marginally from their peak in Q3 2015. Weaker economic growth and regulatory changes in the form of higher deposits for investors have dampened demand.

The BRIC nations recorded annual price growth of 3% on average in the 12 months to March

2016, four years ago this figure was closer to 11%. Capital flight, currency shifts (partly due to the US rate rise), volatile equity markets and slowing wages are hampering demand.

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