Hong Kong Real Estate Prices Keep Soaring; Dubai Prices Keep Declining

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Home prices in the fourth quarter of 2009 continued to surge in Hong Kong and the Asia Pacific region, while values plummeted in Dubai and Eastern Europe, according to the latest Knight Frank Global House Price Index.

Around the world, prices fell an average of 3.8 percent in the quarter, including .6 percent drop in the United States.

"The recovery in global housing markets is still proving somewhat shaky," said Knight Frank head of residential research Liam Bailey. "Although a number of locations saw staggering growth of up to 28 percent in 2009, prices were still falling in almost half of the countries in our index during the final three months of the year."

See related Real Estate Channel news post on April 21, 2010:

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Hong Kong saw prices jump 27.6 percent in the quarter, followed closely by a 25.1 percent increase on mainland China. On the other end of the spectrum, in Dubai prices were down 42.1 percent from the previous year, with Lithuania, Estonia, Ukraine and Latvia posting declines between 32 and 50 percent. Prices were down 26.3 percent.

Taking a step back, the numbers are interesting, but are already a bit dated. The fourth quarter of 2009 seems long ago, given the rapid changes in the economic situation. China, for example, has been moving in recent weeks to clamp down on the market, including new provisions designed specifically to slow down the number of investors buying houses.

But the index still provides a snapshot of the trends, and the separation between the markets that are bouncing back and those struggling to find bottom.

"There remains a very clear polarization between the locations at the top and bottom of our table," Bailey said. "Five countries posted double-digit growth last year, but nine actually saw prices fall by over 10 percent."

The study also finds some interesting quirks. For example, Israel saw prices jump 21.3 percent, reflecting "a continuing desire by Israelis to invest in property rather than equities, other less tangible asset classes and low yielding deposit accounts." Fifty percent of homes purchased in Israel were second homes, according to a recent report.

And Australia is clearly benefitting from the strength of the China economy, posting a 5.2 percent increase in prices in the fourth quarter alone.

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