Knight Frank have released their Global Residential Cities Index for the second quarter of 2021, that tracks the mainstream residential prices across 150 cities from around the world.
With the effects of the pandemic being felt in every corner of the globe, a flow-on effect is most certainly a rise in house prices. The bottom 11 cities that were surveyed were the only cities that recorded a decrease in house values, with the vast majority seeing an increase.
Staggeringly, 57 of the 150 cities that were tracked saw prices rise by a figure of 10 percent or more compared to the beginning of the year until the end of Q2 2021. In China, where the pandemic started, the effects of the pandemic are being felt significantly, with six Chinese mainland cities falling into the bracket of a 10 percent growth rate two years ago, with only Ghangzhou now fitting the criteria.
In terms of residential price growth in Australia, Hobart has recorded the highest increase with a 24.6 percent change in value over 12 months, seeing it ranked 14th in the world. Canberra was next in 15th with a change of 23.5 percent. Sydney (28th), Adelaide (42nd) and Melbourne (44th) recorded increases of 18.7, 13.9 and 13.7 percent respectively, with Perth (48th) recording a 12.5 percent growth and Brisbane (54th) recording the smallest growth increase of all recorded Australian cities, with 11.2 percent.
Looking at the findings from a global perspective, it is clear that many cities are outpacing their national housing markets, with prices rising by approximately 9.8 percent on average in the year until the end of Q2 2021. This number compares to the average of 9.2 percent across 55 countries and territories. Cities in the US, Canada, South Korea, New Zealand and Russia are amongst the strongest risers, with Canada’s Halifax leading the rankings with prices rising by some 30.8 percent in the year to Q2 2021.
Comparing the United States to their political rival China, 15 US cities saw their residential values increase by 19.6 percent on an annual basis, compared to just 5.6 percent across 15 of China’s mainland cities.
Attention now turns to how long the boom will last. Knight Frank is of the belief that demand will begin to wane as savings amassed in the pandemic start to dry up as economies restart. Norway is the first G10 economy to raise rates with New Zealand, the US and the UK set to follow in the short to medium term.
Other markets are taking a more radical and proactive step to curb price inflation. Jacinda Ardern introduced a countrywide ban on foreign buyers in 2018 that is still in effect in New Zealand, with Canada’s President Trudeau re-elected on a promise to introduce a similar ban for two years in the wake of the pandemic.
Knight Frank expects the index rankings to look very different in 12 or even six months’ time due to a number of factors around future government policy. To read the report in full, click here.