World Economy

Dubai House Price Fall World’s Highest

Dubai House Price Fall World’s HighestDubai House Price Fall World’s Highest

Dubai house prices fell the most in the world in the second half of last year with a 6.2 percent average drop, according to Knight Frank’s Global House Price Index published Tuesday.

Lithuania was next lowest with -5.1 percent, followed by China with -4.9 percent and Ukraine clocking a 4.3 percent fall, Albawaba reported.

This represented a big change in direction for Dubai which topped the Knight Frank table in 2013 with a 35 percent increase. In the autumn of that year a doubling of transaction costs and tough new mortgage restrictions brought a swift end to the boom.

Topping the league table for 2014 was Ireland, up 16 percent, albeit still trailing 38 percent behind peak house valuations.

Four other countries managed double-digit growth in house prices last year: Turkey, Kazakhstan, Hong Kong and also Lithuania despite its collapse in the second half.

However, in 2015 it looks like the rest of the world may catch up with Dubai’s plunge.

Knight Frank’s Global House Price Index registered a fall in prices in the final quarter of 2014, its first quarterly decline in over two years. The latest data underlines not only the fragility of the global economic recovery but the extent to which it is filtering through to buyer sentiment.

Knight Frank commented: The outlook for 2015 is set to be dominated by two monetary policy decisions…. firstly, the extent to which the ECB’s new QE program will stimulate the eurozone’s housing markets and secondly, the timing of the US Federal Reserve’s rate rise.

 Dollar Peg

The focus is not just on the resilience of the US market and the extent to which it absorbs the rise but the impact on those markets whose currencies are pegged to the dollar (like China and Dubai).

In the US, the Knight Frank study showed house prices falling by 0.4 percent in the last quarter of 2014, although with an annual gain of 4.6 percent. Ukraine, Hungary and Portugal showed the biggest house price falls in the last three months of 2014 with Dubai down one percent.