South Africa leads world housing boom
South Africa is leading the world housing boom, with property prices surging by 35%, according to figures out today.
A study by the Economist shows that over the past year house prices have risen by 10% or more in 11 of the countries tracked.
Never before have so many countries had housing booms at the same time.
Second is Hong Kong (31%), while Spain enjoyed the biggest rise (17%) among the developed countries, the same rate of increase as in 2003.
Australia is now seeing prices falls. After topping the global house-price league for most of last year, prices are dropping down under, though they remain 8% higher than a year ago.
In contrast, the property market is still hotting up in the US and France. The average price of American homes jumped by 13% in the year to the third quarter - the fastest increase on record in real terms. French house prices increased by 15% over the same period.
Calculations by The Economist show that home prices have hit record levels in relation to incomes in the US, Australia, Britain, France, Ireland, the Netherlands, New Zealand and Spain.
In other words, ratios of prices to incomes are now above levels that have proved unsustainable in the past and have been followed by a fall in real house prices.
“Japan provides a nasty warning of what can happen when bubbles burst,” The Economist reported.
Japanese property prices have fallen for 13 consecutive years by a total of 35% from their peak in 1991.
The Economist estimates that over the past three years the total value of housing in developed economies has increased by $20 trillion.
