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| A view over apartment complexes in Seoul, Dec. 21 / Yonhap |
By Anna J. Park
While housing prices continued to rise in many countries during the third quarter this year, Korea turned out to be the country that posted the biggest fall globally in average housing prices during the period.
According to U.K.-headquartered real estate company Knight Frank's quarterly "Global House Price Index" published for Q3 this year, Korea's housing prices fell by 7.5 percent in nominal terms during the quarter, compared to a year ago. It is the largest loss ratio logged among 56 countries and territories that the real estate company surveyed.
The Global House Price Index published quarterly by Knight Frank tracks the movement of mainstream residential prices across 56 countries and territories worldwide. The index tracks nominal prices of housing prices, using official statistics, in local currencies.
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Out of the 56 surveyed, only six countries and territories ― Korea, mainland China, Hong Kong, Peru, New Zealand and Morocco ― posted a nominal fall in their average housing prices during the third quarter, compared to 12 months earlier.
Twenty-one countries of the 56 surveyed logged double-digit growth in their average nominal housing prices. Turkey topped the chart with a 189.2 percent increase, followed by Estonia's 27.3 percent jump, Hungary at 23.7 percent and both Czech Republic and Iceland at 22.6 percent.
Yet, when the prices were adjusted into real terms, factoring in each country's inflation rate, the real price increase rate for Turkey was lowered to 57.6 percent. Other countries' increase rates were also lowered in real terms.
However, Korea is still ranked the lowest in real housing terms as well, except only Ukraine that's been invaded by Russia since early this year. Korea's real housing price fell by 12.4 percent, which is on par with that of Peru. Only Ukraine trailed behind the list, with the country posting a fall of 19.8 percent in its real average housing price in the third quarter.
The results show countries with central banks putting priority in raising interest rates tended to see their average housing prices slide further. Canada's rank in the price index plunged to 34th in the Q3 result from 10th in Q2, as the Bank of Canada increased its policy rate rapidly from 0.25 percent in March to 4.25 percent this month. Australia is a similar case, with its ranking plummeting to 47th from the previous quarter's 28th place.
Research by the Korea Institute of Finance (KIF) shows the average housing price falls by 5.8 percent over a period of two years, when the interest rate rises by one percentage point.
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