A recent report from Trulia has supported the belief of some analysts that there is a very real trend away from home ownership and towards renting. Between 2006 and 2014, the share of US households that rented grew in every state and went from 36.1% to 41.1% across the whole country. Unsurprisingly the greatest increase in rentals were seen amongst millennials (62.5% in 2006 to 71.6% in 2014), but there was also a marked increase amongst other age groups including 35-54-year-olds (33% to 40.7%) and the over 55’s (24.4% to 27%).

Homeownership is no longer as attractive as it once was and the US industrial economy has had to adapt to that. Across the US, cities and metros with higher rates of homeownership have had trouble adjusting to economic downturns due to the fact that their residents are trapped in housing that they cannot sell. However, cities and metros with greater percentages of renters have proven better able to cope with the transformation from an industrial to a knowledge based economy.

The increase in percentage of rentals has occurred gradually since the recession and many suspect will continue for a long time into the future. This is not only because many people prefer a more urban-style of living, but because flexible rental housing in denser areas is more in sync with today’s knowledge economy.

Two of the most important indicators of the health of the global housing market are the Knight Frank Global House Price Index and the Economist House Price Index. With both of the latest versions reporting positive growth, the picture is looking good for the global housing market.

Watching the US

The Knight Frank index reports an increase in prices of 2.7% in the year to September 2015, with 82% of the 55 housing markets tracked reporting positive growth (up from 75% last quarter). Anton Tardif, CEO of specialist property investment company Roche, comments,

“The Knight Frank index is always a reliable indication of the health of the real estate market around the world. This quarter the focus is very much on the likely US rate hike and its impact – both on the US housing market and on those currencies pegged to the dollar. US prices have increased by 4.9% on average in the year to September 2015, with the stable market attracting investors from around the globe.”

Buy-to-let opportunities in the US, such as Circle Oaks Village, 20 minute from Charlotte in North Carolina, exemplifies why investors are so keen to be part of the US market. The fully refurbished and immediately tenanted properties are available from $88,224, with minimum 18.8% NET per annum assured for 5 years.

Economy watch

As the world’s largest economy, the performance of the US and its housing market is of huge global significance. According to CNN Money, the US economy is currently worth $18.1 trillion. The next biggest is China, at $11.2 trillion. But the CNN projections show the US streaking ahead over the coming five years, increasing to $22.5 trillion by 2020, compared to China’s projected $16.2 trillion.

Germany is also facing significant growth, according to the CNN Money data, with its economy tipped to grow from $3.4 trillion in 2015 to $4.1 trillion in 2020. The Knight Frank House Price Index also shows positive news for Germany, with house prices up 4.7% in the year to September 2015.

It is this European residential real estate market that will bear watching over the year ahead, according to Savills, with foreign investors contributing to what is predicted to be a record fourth quarter, with European turnover reaching €234bn by the end of the year.

Rents are also due to grow, according to Savills, with increases of between 2.5% and 3% over the course of 2016. The figures make investing in strong European markets such as Germany particularly attractive. At Stadtpark Steglitz in Berlin, buy-to-let apartments are available to invest from €153,670 with up to 5.6% yield and excellent capital growth expected.

The second opinion

The news from the Economist House Price Index confirms the positive tale. The data shows global prices rising at a median pace of 4.7%. Of the 26 markets tracked, prices are falling in only five of them. With so many countries experiencing positive growth, 2016 could shape up to be a bumper year for the global property market.

For more information about investing in buy-to-let properties in top global locations such as North Carolina or Berlin, contact Roche or call +44 1865 202 700.