According to the Knight Frank Global House Price Index Q1 2014, Dubai topped the annual rankings for the fourth consecutive quarter, recording price growth of 27.7 percent while South Africa sitting at number 19 in the rankings recorded growth of 7.0 percent in the year to the end of March.
According to the Knight Frank Global House Price Index Q1 2014, Dubai topped the annual rankings for the fourth consecutive quarter, recording price growth of 27.7 percent in the year end to March.
Kate Everett-Allen, Knight Frank international residential researcher, points out that the index has risen for eight consecutive quarters but the rate of price growth slowed in the first three months of 2014, rising only by 0.6 percent down from the previous quarter of 1.2 percent, but the index still recorded annual growth of 7.1 percent.
In Dubai, prices rose by 3.4 percent in the first three months of 2014, evidence that the doubling of transfer fees and the mortgage cap are having an impact on the Emirate’s property market.
China came in at number two with growth of 17.5 percent, at number three is Estonia (16.2 percent), Turkey (13.8 percent) at number four and number five in the rankings is Taiwan with 12.2 percent growth.
Everett-Allen notes that price growth in the US slowed slightly in the first quarter, rising on average by 10.3 percent on an annualised basis, down from 11.3 percent in Q4 2103.
Countries at the bottom 10 of the rankings are still seeing price falls, albeit, at a slower pace, and these include the likes of Croatia, Cyprus and Greece.
“For the first time since 2008 no single country tracked by the Global House Price Index has recorded an annual price fall in excess of 10 percent,” she says.
She says they expect to see the index’s performance strengthen again in the second quarter with all eyes focused on central banks, in particular the Federal Reserve, the Bank of England and the European Central Bank - the issue is not when interest rates rise but the speed and extent to which they do.
Buying property in South Africa
Meanwhile, Bill Rawson, chairman of the Rawson Property Group, says although the UK, European and US markets are showing signs of recovery, he prefers property investments in South Africa because the cost of buying overseas property in rands is much higher especially for many small investors.
In South Africa, returns average between 8 and 10 percent and even higher in sought-after areas, pointing out that these figures increase annually too.
“Those who did invest in offshore property in 2009 have benefitted by the depreciation of the rand, however, if they wish to bring this money back into the country, they will be taxed on the exchange rate profit, if any.”
Rawson says real returns usually given in sophisticated First World countries, even allowing for their inflation rates, are by any standards very low with 2 to 3 percent being the average.
In South Africa, returns average between 8 and 10 percent and even higher in sought-after areas, he says pointing out that these figures increase annually too.
Chris Tyson, chief executive officer of Tyson Properties, a Christie’s International Real Estate affiliate, says in Durban luxury housing estates like The Executive in La Lucia, Hawaan Estate in Umhlanga and Zimbali Estate in Ballito are showing phenomenal growth as buyers are prepared to pay top dollar for these homes.
Buyers are mostly local and looking for secure homes, foreign buyers as well as holiday home buyers who pay anything from R1.7 million for plots up to R17.5 million for finished homes in these areas.
According to “Luxury Defined: An Insight into the Luxury Residential Property Market” report, wealthy foreign buyers were driven to invest in trophy homes outside their resident countries because of a desire to move equity from turbulent markets to stable, currency-favourable locations.
In addition to wealth protection and currency attractiveness, many international local buyers also purchased homes abroad because of educational opportunities for their children.
Other information coming out of the report indicates that changes to tax laws did impact some prime property markets in 2013, but in general they had little impact outside of Asia and France. – Denise Mhlanga
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