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The world's house price hotspots
Want to make money from property? We look at the best places in the world to buy.
Fancy a des res in Delhi or a mansion in Moscow?
They may not be the first places you think of when you consider a holiday home location, but perhaps you should take a closer look. Because property prices in India and Russia have risen faster than anywhere else in the world, according to new research from Lloyds TSB.
It says that house prices in India have soared by a whopping 284% in the last 10 years - the biggest jump recorded in its Global Housing Market Review.
Homes in Russia have seen their value rocket by an enormous 209%, and third in the global hotspot list is South Africa, which experienced a rise in house prices of 161% between 2001 and 2011.
These impressive figures compare to a real term rise in property prices of 50% in the UK (taking into account inflation). In fact, we come in at number 13 in the bank’s global hotspots list – mid-table mediocrity among the 32 countries surveyed.
[Related link: Get free mortgage advice]
Emerging market dominance
The real house price winners are emerging markets, which have seen prices shoot up in the last decade, as well experiencing rapid wider economic growth.
In fact the 10 countries to have seen the biggest increase in house prices have also experienced an average growth in GDP of 155% since 2001.
So while Indian house prices have soared by 285% - almost six times the UK rate and 10 times the growth seen in the eurozone - its economy has also grown significantly, with GDP rising up a mind-boggling 280%.
Big economies, big price falls
At the other end of the scale some of the biggest falls in house prices have been experienced by the world’s largest economies.
Of the 32 countries tracked by Lloyds TSB only six recorded a fall in house prices over the last decade, and half of those are members of the G8 – Japan, Germany and the US.
Japanese house prices have performed the worst of any in the world, slumping 30% in the last decade.
Average house prices in Ireland were not far behind, falling by an average of 23% since 2001, while German homes lost 17% of their value over the same period.
Indeed, Europe performed poorly over the last 10 years, recording house price growth of 23%, less than half of the UK’s 50% growth for example.
Below are the 10 global property hotspots and the 10 ‘not spots’ over the last decade:
10 top global property hotspots
Place | House price changes in 2011 | House price changes in last decade |
India | 8.7% | 284% |
Russia | -24.3% | 209% |
South Africa | -1.1% | 161% |
Lithuania | -1.3% | 143% |
Hong Kong | 13.6% | 125% |
Bulgaria | -10.0% | 106% |
France | 4.3% | 82% |
New Zealand | -2.1% | 79% |
Australia | -5.7% | 76% |
Norway | 6.9% | 72% |
UK | -8.3% | 50% |
10 worst performing areas
Place | House price changes in 2011 | House price changes in last decade |
Japan | -3.3% | -30% |
Ireland | -15.9% | -23% |
Germany | 1.9% | -17% |
Portugal | -4.0% | -11% |
Austria | 1.6% | -2% |
United States | -8.0% | -2% |
Greece | -9.2% | 2% |
Netherlands | -5.3% | 2% |
Malaysia | 3.3% | 22% |
Denmark | -4.3% | 25% |
Global average | -2.1% | 56% |
Source: Lloyds TSB, Global real house price % performance, 2001 Q3 – 2011
Changing picture
Of course past performance is no guarantee whatsoever of future performance.
Indeed, the research shows that those countries where house prices performed the best in the first half of the last decade were actually hit hardest in the second half, following the global financial crisis.
Lithuania, for example, recorded both the largest rise in house prices in the six years to 2007 (330%) and the largest contraction in prices since then (-59%).
And while Russia was the second strongest performer of the last 10 years, it actually saw the largest fall in prices during 2011, a drop of 24%.
Of course, if you are thinking about buying a house abroad you may have other considerations, aside from solely financial. Perhaps you are looking for a holiday home for your family, or to rent to others to provide you with an income.
Whatever the reason, if you are thinking of buying a property abroad take heed of the following essential tips:
Funding your purchase - Whether you intend to remortgage your UK property to buy in cash abroad, or you plan to take out a mortgage in a different currency, get independent and expert advice. Some mortgage brokers specialise in buying abroad and they can give you invaluable guidance.
Do your homework - Different countries have very different property purchase processes, some of which can be lengthy and expensive. Make sure you know exactly what you are getting into, and have the funds to cope with it. And take advice from an expert who knows the law in that particular country.
Location, location, location - At home or abroad the same rules apply. If you are buying a property to holiday in yourself or to let out, choose your location wisely, paying particular attention to the transport links. Remember that budget airlines often change their routes so if possible choose a location that is served by more than one airline from the UK.
The right property - If you are looking to let, make sure your property has everything a holiday maker will need. A pool and air-conditioning could be seen as essential in hot countries, as well as outdoor space. Properties with fantastic sea views are obviously more expensive, but are popular with holidaymakers, so likely to let for premium rates.
Get tax advice - When you are buying a dream property abroad tax may not be at the front of your mind, but it is crucial you get advice about all the tax implications of your purchase. Do you have to pay a buying tax (like Stamp Duty)? Are there regular taxes to be paid on your rental income or council taxes you need to be aware of? Also, what about when you sell the property? Will you be liable for a tax on any profit?
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