Peru leads home price increases in the region over Chile, Brazil and Colombia

RIO DE JANEIRO, BRAZIL – Peru ranked among the 20 countries globally with the highest growth in housing prices in the last twelve months, according to the international consulting firm Knight Frank, which compares average values in 56 nations and territories.

The country recorded a 13.4% increase in the average value of houses and apartments between the third quarter of 2021 and the same period of 2020, ranking 16th among the territories with the highest increase based on Knight Frank’s Global House Price Index for the third quarter of last year.

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In the report, Peru appears as the Latin American country with the highest annual increase, ahead of Chile (ranked 25th with a 12-month gain of 10.7%), Brazil (ranked 43rd with a rise of 5.2%), and Colombia (ranked 46th with an increase of 3.4%).

In addition, Peru advanced three places with respect to the report for the second quarter of 2021, when it was ranked 19th, with an accumulated twelve-month increase of 9.1%.

According to the report, world prices rose by an average of 9.4% in the twelve months to September last year. The countries with the highest increases were Turkey (35.5), South Korea (26.4), New Zealand (21.9%), Sweden (20.3%), Australia (18.9%), the United States (18.7%), Jersey (18.4%), the Netherlands (18.4%), Slovakia (18.4%) and Canada (17.3%).

“House prices continue to rise globally. Fifty-four of the 56 countries and territories analyzed by the index saw prices rise year-over-year, with only Malaysia and Morocco bucking the trend. Moreover, the proportion of housing markets experiencing annual price growth of more than 10% now stands at 48%, up from 13% at the start of the pandemic,” the consultancy highlighted.

THE REASONS

According to Knight Frank, one of the direct explanations for the rise in prices is to be found in the massive fiscal and monetary stimuli that have been implemented to boost economies during the health crisis.

The rise in prices keeps several economies on alert worldwide due to fears of a bubble, which has led several countries to implement measures to cool down the market, the specialized agency pointed out.

New Zealand, for example, eliminated tax incentives for real estate investors, and the government expects housing price inflation to slow to just 0.9% in June of this year. China has also been mentioned, which has adopted a series of measures to curb bank lending to the sector.

In the U.S., the consultancy has highlighted that mortgage applications have fallen and the proportion of households who think now is an excellent time to buy a home hit a decade low, standing at 28% in June.

“Despite the boom times, there are signs that the rate of growth may have peaked in some parts of the world. Eighteen countries and territories saw their annual price growth rate moderate between June and September this year, including some of the best-performing countries since the start of the pandemic – New Zealand, the United States, and the United Kingdom,” the consultancy highlights in its third-quarter 2021 report.

It adds that interest rate increases, property tax changes, and affordability concerns contribute to slower growth rates. “However, the real estate boom we’ve seen globally is expected to continue into 2022, omicron and new variants (of coronavirus) permitting,” Knight Frank said.