Across the world and through the ages, the single fundamental driver of residential property demand has always been the number of households in a population wanting a roof over their head. The price of those roofs is then a function of the number of properties and the amount of money available with which households can compete for them.
Translated into global investment property, this means the following three factors will make for house price growth in excess of general inflation:
■ Growing population
■ Growing affluence
■ Limited land and/or housing supply
The absence of one of these variables can stall a housing market and the absence of two or more can send property values downward.
Having boiled the global housing market down to just these three variables: demographic, economic and supply-side, it is important to point out that the way these variables play out on the ground and at different times is extremely complex and results in a wide variety of market behaviours.
The combined effect of economic performance and recessionary cycles, inflation and fiscal regimes, demographic changes, the availability and cost of finance as well as land supply politics, policies and planning, not to mention cultural, legal and tenure norms means that housing markets behave in very different ways across the globe.
Understanding and navigating this complexity is a formidable task for any investor in their home environment, let alone on the global stage. This document is designed to provide the key information needed to understand a wide variety of world residential markets and then to home in on a few of the most internationally-invested markets in cities and resorts for a deeper look and prognosis on how they might behave in future.
Global Housing Market Performance
Figure 1 shows just how differently housing markets have behaved over the last 30 years. It shows average house price movements in different countries, adjusted for just one of many external variables that impact them, namely, inflation. It shows that there were an enormous range of experiences in different housing markets before the Global Financial crisis of 2008, and there has been an equally enormous variety of experiences since.