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Iceland Mag

Economy

Iceland led the global real estate price increases in 2016

By Staff

  • Downtown Reykjavík House prices in Iceland rose faster than in any other real estate market. Photo/GVA

House prices around the world increased by 6% on average in 2016, up from 4.1% in 2015, according to a house price index calculated by the London based research firm Knight Frank (pdf). This is the highest annual rate recorded since the first quarter of 2014, according to the index.

More than double global growth level
The largest increase took place in Iceland, where house prices rose by 14.7% on average, up from 9% increase in 2015, the firm calculates. This is the highest recorded increase anywhere around the world last year. Knight Frank concludes that a strengthening economy, including GDP growth of 7.2% in 2016 and strong demand, including rising interest from foreign buyers, explains the rise.

Icelandic analysts have pointed out that a driving force for price increases in the Icelandic housing market is an acute shortage of smaller apartments, especially in Reykjavík.

Read more: Real estate prices continue to soar: Too few small apartments being built

Real estate price increases in Iceland are followed by those in New Zealand where real estate prices rose by 12.7%, Malta, where they rose by 12.4% and Canada where prices rose on average 12.3%.

Real estate prices in the US rose by 5.8% on average in 2016, and by 4.5% in the UK. 

Global house price increase 2016
Booming housing market Global house price increase in 2016, selected countries Photo/Iceland Magazine-data from Knight Frank 

 

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