Growth in U.S. Property Prices Bounces Back After First Quarter Slowdown

Source: CoStar News
By: Costar News Staff
Date Posted: May 26, 2016

Commercial property price growth picked up in April after a slower than expected first quarter, according to the latest CoStar Commercial Repeat sale Index (CCRSI) released this week

The two major CCRSI indices rebounded during the month as investors returned to the market and resumed sales activity after a pull-back at the beginning of the year. The value-weighted U.S. Composite Index increased 0.9% and the equal-weighted U.S. Composite Index grew 0.6% in April 2016.

Total property sales remains muted compared with last year, reflecting the slow start. Composite pair volume of $33.4 billion year-to-date through April 2016 was down 9.2% from the same period last year.

The U.S. property sales reflected the general economic slowdown seen in the first quarter as financial market volatility over global political concerns took a toll on the general economy at large. Due to the slow start to the year, CoStar analysts do not expect property price growth to match the record pace of the last two years.

The investment-grade segment of the market was hit particularly hard. Transaction volume was down 11.2% in the investment-grade segment and 4.1% in the general commercial segment in the first four months of 2016 from the same period in 2015.

However, liquidity measures indicate continued healthy investor sentiment for commercial property, and the positive outlook for CRE fundamentals suggests the asset class should continue to attract investor interest.

The average time on the market for for-sale properties dropped 19.7% in the 12-month period ended in April 2016 and the sale-price-to-asking-price ratio narrowed by 2.9 percentage points in the 12-month period ended in April 2016 to 94.3%, the highest this ratio has been since August 2006 and further indication of positive investor sentiment.

link to article: Growth in US Property Prices