The UK has dropped from 26th to 47th in the global house price increase rankings over the past year, according to Knight Frank’s latest Global House Price Index.
On an annual basis, property prices in the UK fell 3.1 percent, says Knight Frank, having fallen by 5.6 percent in the past six months.
The UK’s place in the global ranking for property price growth is now just four places higher than Ukraine, which ranks 52nd, after property prices fell 7.8 percent over the past year amid the ongoing war .
Slow: Property prices in 56 countries rose at slowest pace since 2015 in last year, Knight Frank said
Property prices in the UK have fallen while inflation remains high and many households are battling higher mortgage rates and repayments.
According to data from Moneyfacts this week, the average interest rate on a five-year fixed-term mortgage has risen above 6 percent for the first time since the November mini-Budget breakdown.
Property prices in 56 countries around the world rose at their slowest pace since 2015 over the past year, Knight Frank’s rankings show.
Annual global house price inflation slowed to 3.6 percent in the 12 months to the first quarter of 2023, down from growth of 5.7 percent.
However, while global house prices fell by 0.6 percent in the last three months of 2022, they rose by 1.5 percent in the first three months of 2023.
UK woes: The UK’s ranking has dropped from 26th to 47th in the property price growth ranking
In the past year, South Korea, New Zealand, Hong Kong and Sweden saw real estate prices fall by 15.7 percent, 13 percent, 10.3 percent and 8.8 percent respectively.
New Zealand saw one of the largest price drops worldwide in the past year.
While house prices in New Zealand are likely to fall further, the speed and depth of the correction suggests that an uptick in both demand and ultimately prices will rise sooner than in many other developed markets, Knight Frank said.
Australia and Denmark also underperformed the UK in the rankings, ranking 48th and 49th respectively, with both seeing house prices fall by more than 5 per cent a year, Knight Frank added.
At the other end of the spectrum, Turkey again topped the rankings last quarter, but the 132.8 percent increase in property prices in the year to March 2023 is largely due to “rampant inflation,” Knight Frank said.
It added: “A 22 percent quarterly rise in home prices there in the first quarter suggests more is coming this year.”
The US came in 39th in the ranking, after real estate prices rose 0.7 percent over the past year but fell 1.1 percent in a six-month comparison.
Spain, an ever-popular destination for Britons looking to buy a home abroad, saw house prices rise by more than 3 percent over the past year, keeping the country 29th in Knight Frank’s latest ranking.
Eastern and Southeastern European countries dominated the top of the ranking with North Macedonia, Croatia and Hungary all showing strong annual growth of more than 15 percent.
Singapore performed best in the Asia-Pacific region, with annual growth of 11.3 percent.
Knight Frank said: ‘Recent tax policy changes in Singapore have mainly focused on foreign buyers to try to cool rising prices, although there have been enough domestic buyers to push prices to new heights. The Urban Redevelopment Authority releases new locations for development to increase the housing supply.’
Looking ahead, Knight Frank said “risks” remain for many global real estate markets, the biggest being high inflation.
It said: ‘Key figures are falling in most locations, but core inflation remains stubbornly high in the UK, US and Europe.
While we may be getting closer to peak interest rates, the downward pivot may be further away than expected even a month or so ago. The first policy rate cuts could be delayed for several key markets until the second half of 2024, which would reduce transactions and market liquidity for 12 months or more.”
Liam Bailey, global head of research at Knight Frank, said: ‘While the latest data shows a significant slowdown in annual price growth, quarter-on-quarter growth improved.
Global house prices fell by 0.6 percent in the last three months of 2022, but rose by 1.5 percent in the first three months of 2023.
“This turnaround in itself does not confirm that global markets will improve – rather, it highlights that tight supply, limited new home construction and strong family formation will support prices in many markets.”
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