Turkey and the UAE Lead in Real Property Price Increases, Sweden and New Zealand Lag

Since interest rates started rising in the first quarter of 2022, the world as a whole has seen a real decline (net of inflation) of 3.2% in property prices. According to data from the Bank for International Settlements (BIS), the effect of this was felt more strongly in advanced economies which declined 5.4% while emerging markets declined by a lower 1.2%.

Turkey saw a 57.4% real increase even in the face of a 62% inflation rate with people using houses as a hedge against inflation.

What’s interesting about Turkey is that property prices have gone up far in excess of inflation. In addition to current inflation, future inflation expectations have been built into property prices as official interest rates have stayed far below the inflation rate from 2020 onwards. It remains to be seen whether the current 42% official interest rate will change this.

Property prices in the United Arab Emirates including Dubai had the second highest real increase, going up at 15.7% adjusted for inflation. However as the chart below shows the country is prone to cycles of overbuilding with current prices still below the heights reached in 2014 in real terms.

New Zealand’s central bank was one of the first to raise interest rates after the pandemic and the effect is showing in a 19% drop from the first quarter of 2020. The household debt to income ratio was one of the highest in the world at 175% when rates started going up and has dropped to 165% since.

Sweden and Canada which had similarly high household debt to income ratios of 171% and 181% respectively also saw real drops in property prices of 18.7% and 17.2% respectively as their central banks raised rates

Among European economies, Greece has faced down ECB rate increases with a 12% increase in real property prices. As the two charts below show, it moved in the opposite direction as the rest of the Euro zone since 2022 as it recovered from a much steeper fall from 2009 to 2016.

The US meanwhile had a very small drop of 1.1% and this has reversed since then. Expected interest rate cuts in 2024 should bring property prices back on their previous post-2010 trajectory

The table below shows real property price changes for all countries covered by the BIS data:

RegionChange% from 2022-Q1Latest Period
Türkiye57.42023-Q3
United Arab Emirates15.72023-Q3
Greece12.02023-Q3
Philippines7.42023-Q2
Mexico6.22023-Q2
Singapore3.82023-Q2
Israel3.22023-Q2
Croatia3.22023-Q2
North Macedonia2.82023-Q3
Portugal2.32023-Q2
Thailand1.52023-Q3
Switzerland1.42023-Q3
Cyprus1.22023-Q2
Iceland0.82023-Q3
Lithuania-0.02023-Q3
Japan-0.12023-Q2
India-0.42023-Q2
Spain-0.72023-Q2
Malta-0.92023-Q2
Malaysia-1.02023-Q3
Chile-1.02023-Q2
United States-1.12023-Q3
Emerging market economies (aggregate)-1.22023-Q2
Bulgaria-1.92023-Q2
Slovenia-2.02023-Q2
World-3.12023-Q2
Indonesia-3.22023-Q3
Serbia-3.32023-Q3
Belgium-3.52023-Q2
China-4.12023-Q2
France-4.92023-Q2
Ireland-5.22023-Q3
Advanced economies-5.42023-Q2
Colombia-5.52023-Q2
Italy-5.82023-Q2
United Kingdom-5.92023-Q3
Estonia-5.92023-Q2
Russia-6.42023-Q2
Brazil-6.72023-Q3
South Africa-7.02023-Q3
Peru-7.42023-Q2
Norway-7.92023-Q3
Euro area-8.52023-Q2
Poland-8.92023-Q2
Netherlands-9.02023-Q2
Latvia-9.02023-Q3
Morocco-9.12023-Q3
Australia-9.42023-Q3
Luxembourg-9.82023-Q2
Austria-10.12023-Q2
Slovakia-10.92023-Q3
Romania-12.02023-Q2
Denmark-12.52023-Q2
Korea-12.52023-Q3
Finland-12.72023-Q2
Hungary-13.42023-Q2
Czechia-14.12023-Q2
Hong Kong SAR-14.72023-Q3
Germany-16.22023-Q2
Canada-17.22023-Q3
Sweden-18.72023-Q3
New Zealand-19.02023-Q2