Australia leading turnaround in global house prices

Australia’s property market is leading stabilisation in house prices across the globe, a new index shows.

Knight Frank’s Global House Price Index results for the second quarter of 2009 ranks Australia second in June quarter turnaround.

In Australia, house prices fell 1.4% over the last financial year, but the turnaround from the March to June quarters was 4.2%, the second-highest rise in the world.

Australia followed Norway, which experienced a 5.3% turnaround in the June quarter. Israel ranked third, with a jump of 4.0%.

“This is a good sign Australia’s residential property market is rebounding strongly, Australian national director of research Matt Whitby told the Financial Review. “It does appear that the worst is behind us.”

“Global residential markets bottomed in the [March] quarter of 2009, with numerous markets rebounding in the June quarter.”

Whitby says the relatively short supply and high demand for housing in Australia is responsible for the positive results.

Over the year to June 2009, Australia’s housing market ranks as the tenth strongest in the world, after Israel, Switzerland, Indonesia, Jersey, Luxembourg, Belgium, Hungary, Germany and New Zealand.

Israel’s market jumped 12.5% in the year to June 2009, with Switzerland’s prices strengthening by 6.1%. Indonesia’s house prices rose by 2.1%.

Liam Bailey, head of residential research at Knight Frank, says the index shows house prices are starting to stabilise across the world.

“The report shows values increased in almost half of locations reporting price changes for the second quarter. Significantly, quarterly price falls accelerated in only 22% of locations and did not exceed 10% in any country. This compares with double digit falls in a number of locations during the first quarter.

But Bailey says that while “further falls are always a possibility while credit flows remain constrained and the global economy struggles to recover from recession, it does appear that the worst is behind us.”