Can You Guess Where The Hottest Housing Market In The World Is?

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Includes: AWP, DRA, DRN, DRV, DRW, EMRE, FFR, FREL, FRI, FTY, GQRE, GRI, IARAX, ICF, IFAS, IFEU, IFGL, IFNA, IGR, IYR, JRI, JRS, KBWY, LMBS, LRET, MORL, MORT, NRO, PSR, REET, REK, REM, REZ, RFI, RIF, RIT, RNP, ROOF, RQI, RWO, RWR, RWX, RWXL, SCHH, SRET, SRS, URE, VNQ, VNQI, WPS, WREI, XLRE
by: ValueWalk

By Roger Thomas

Hottest Housing Market

On Tuesday, the Federal Housing Finance Authority (FHFA) will release its first estimate of home price appreciation in 2016. With New and Existing Home Sales also on top early in the week, now seems like a good time to review how the housing market in the U.S. compares.

Can you guess?

The options are Denmark, France, Italy, Belgium, Croatia, Spain, Japan, Switzerland, Finland, Norway, South Korea, Netherlands, the UK, South Africa, the US, Germany, Israel, Canada, Ireland, Sweden, Australia, Luxembourg, and New Zealand.

Before looking, perhaps a business cycle view will provide an idea. The graphic probably provides no insight into where home prices are the hottest, but the spaghetti-nature of the graphic speaks to another interesting aspect of global housing markets.

Global housing markets are in no way synchronized. As the saying in the industry goes, real estate is location, location, location. That's no less true at the global level.

Also see Canadian Housing Is Being Propped Up By Just One City [Chart]

Click to enlarge

Housing Prices

Here's the answer:

The hottest housing market in the world right now is New Zealand at +13% year-over-year. The other members of the top 5 hottest include Australia at 11%, Sweden at 11%, Ireland at 9%, and Canada at 8%. On the other end, housing values are weakening the most in Italy (down 3%), France (down 2%), Croatia (down 1%), Belgium (down 1%), and Japan (down 1%).

One perhaps quite sad aspect of the global property markets is how many negatives there are at this point of the economic cycle. Click to enlarge

Hottest Housing Market - Housing Affordability

Housing prices are, of course, only one component of the housing picture. Here's a look at housing affordability (growth in housing prices less growth in disposable income).

Where would you guess housing affordability is growing the quickest?

Interestingly, it's Denmark. Disposable Personal Income in Denmark is growing 5% faster than home prices.

Other countries with moves towards greater home affordability include France (3%), Italy (3%), Belgium (3%), Croatia (2%), Spain (2%), Japan (2%), Switzerland (1%), and Finland (1%).

On the other end, home prices in New Zealand grew 11% faster than disposable personal income. Other countries in this group include Luxembourg (10%), Australia (9%), Sweden (8%), Ireland (6%), Canada (5%), Israel (4%), Germany (3%), the US (3%), South Africa (2%), the UK (1%), the Netherlands (1%), and South Korea (1%).

One country is completely in equilibrium - Norway.

Click to enlarge

Summing Up

Interestingly, the hottest housing market in the world right now is New Zealand, with home prices growing at a 13% year-over-year clip. The weakest housing market is in Italy, where home prices are down 3% year-over-year.

On home affordability, the place where home prices are currently growing the most affordable (not saying the most affordable, just grew the fastest towards affordability) is Denmark, with disposable income up 5% more than home prices. On the other end, the country growing the quickest towards unaffordability is New Zealand, with home prices up by more than 11% over disposable income.

Disclosure: None