The island nation is exceptional as housing markets around the world cool in the face of rising interest rates and political uncertainty
The small island nation of Malta has pulled ahead of pricey Hong Kong to become the world’s fastest growing housing market, according to a report from property consultancy Knight Frank.
A strong economy and limited housing stock has propelled prices on the Mediterranean island by 17% in the second quarter of this year compared to the same time a year ago, according to the report published Tuesday. A growing tech industry in Malta has boosted the country’s economy, which grew by 6.6% in 2017.
Malta unseated Hong Kong, which had the strongest annual price growth in the first quarter of this year and has led Knight Frank’s quarterly Global House Price Index nine times since 2009. Home prices in the autonomous Chinese region grew 15.9% in the second quarter compared to a year ago.
Compared to the rest of the world, the double-digit growth in Malta and Hong Kong is exceptional. Globally, prices grew at a modest rate of 4.7%, the slowest level in nearly two years.
"The rising cost of finance, an uncertain political and economic climate and currency instability in some markets is likely to be tempering demand," wrote Kate Everett-Allen, author of the report and part of Knight Frank’s international residential research team.
Rising mortgage rates and new government regulations are expected to moderate Hong Kong’s runaway housing market, according to the report. The city, along with New Zealand and Singapore, have all introduced new measures this year, including extra taxes or bans on foreign buyers, which are meant to cool rapid price growth.
Meanwhile, there are still areas of the world where housing prices have yet to return to their pre-financial crisis peaks. Saturday marks one decade since the collapse of Lehman Brothers—the beginning of the global crisis—and there are still a dozen countries tracked by Knight Frank where prices are still below their 2008 levels.
They include Spain, Greece, Russia and Ireland—though Ireland is now zooming forward with annual price growth at 12% in the second quarter compared to a year ago.
Meanwhile, only seven countries are experiencing negative price growth. Average prices fell 4.5% in Ukraine, 1.6% in Peru and 1.3% in Saudi Arabia in the second quarter of 2018 compared to a year ago.
Ms. Allen-Everett writes: "Our analysis shows that whilst fewer markets are seeing a decline in house prices, where prices are rising, they are rising at a more moderate pace."