Home values worldwide rose at the slowest pace in two years in the second quarter as declines in Europe combined with smaller gains in Asia, Knight Frank LLP said.
Prices increased 0.1 percent from the previous three months, according to a report released today by the London-based real-estate broker. That’s the least since the second quarter of 2009, when there was a 0.9 percent drop.
The slowdown “was driven by the sovereign-debt concerns in the southern European economies,” Residential Research Associate Kate Everett-Allen said in an interview. “There is still a concern that could spread across the European Union and become a bigger issue because it’s not being dealt with properly.”
Europe’s economies cooled more than forecast in the second quarter and economic confidence plunged in August. The benchmark Stoxx Europe 600 Index entered a bear market on Aug. 8 and has declined about 18 percent from this year’s high in February on concern that Europe will fail to contain its sovereign-debt crisis.
Home values dropped in more than half of the 17 countries that use the euro during the second quarter, led by Ireland, which retreated 4.2 percent from the prior three months, and Portugal, where there was a 2 percent decline. Prices in both the U.K. and Germany rose 0.2 percent.
Prices in the Chinese cities of Beijing and Shanghai declined 0.1 percent in the second quarter as government efforts to curb real-estate inflation began to take effect, Everett-Allen said. In Hong Kong, there was a 3.5 percent increase.
Chinese Premier Wen Jiabao is trying to limit property speculation by constraining mortgage lending, boosting down-payment requirements and limiting the number of home purchases.
“The cooling measures are taking effect in Asia,” Everett-Allen said. “They are trying to deter speculative investment.”
On an annual basis, residential property valued gained 1.7 percent in the second quarter, Knight Frank said. Hong Kong was the most buoyant market with an increase of 26.5 percent, while India ranked second with a 21.3 percent gain. Prices in Ireland dropped 12.9 percent for the year ending in June, the most of any country in the index, followed by Russia, where values fell 12.1 percent.