Rising house prices across many parts of Australia are in line with a wider global trend that is gaining momentum, according to a recent report.
Knight Frank’s Global House Price Index found that average house prices rose by 6.5% on average across 55 countries in Q1 2017; the highest rate of annual growth recorded by the index in three years.
According to the index, 48 countries recorded house price growth during the quarter, with 11 of these countries recording growth in the double digits – that’s 7 more counties than at the same time last year.
Australia’s average house price growth of 7.7% came in 20th place of the 55 countries indexed, up from the 37th position with 3.5% the previous quarter.
According to Knight Frank Head of Residential Research, Australia, Michelle Ciesielski:
“Australia last saw annual double-digit annual growth in Q4 2015, when house prices grew 10.7% as Australia ranked in 4th position.”
“Since this time, the ability to source lending finance has tightened for both local and foreign investors, mortgage interest rates have increased despite the official cash rate falling 50 basis points to currently stand at 1.50%.”
Topping the index’s charts was Iceland, with an average price growth of 17.8%, fuelled in part by the limited supply of new housing in urban areas such as Reykjavik, where it’s estimated that it will take 9000 new apartments in 3 years to meet demand.
Other notable findings from the index included China dropping from seventh to tenth place, in part due to more than 45 cities implementing home purchase restrictions, and price growth in France and the Netherlands rising ahead of their elections, while the UK, South Korea and Germany saw their price growth fall ahead of their own elections.