House prices in China’s cities led price growth around the world, according to new research from Knight Frank.
The agency’s latest Global Residential Cities Index shows that prices across 150 cities worldwide rose by an average of 6.6 per cent in 2016. That growth, though, was predominantly driven by China, which accounted for nine of the top 10 cities. Indeed, without the Chinese cities, the index increased by a significantly lower 4.9 per cent in 2016.
“Nanjing leads the rankings with average prices ending last year 41.1 per cent higher. Chinese cities would have occupied the entire top ten had New Zealand’s Wellington not nudged Shenzhen out of tenth spot,” comments Kate Everett-Allen, Head of International Residential Research.
However, China’s rapid price growth is not expected to last long, with the markets thought to ahve peaked in 2016, thanks to a new round of lending curbs introduced by the Chinese government.
“We expect next quarter’s results to look significantly different,” says Everett-Allen.
Beyond China, the cities of Auckland (12.4 per cent) and Vancouver (17 per cent), which for several years have been New Zealand and Canada’s stellar performers, have now been usurped by their respective rivals, Wellington (23.7 per cent) and Toronto (19.8 per cent).
“Vancouver has seen a new tax on foreign buyers but investors are also keen to spread risk, with some equity-rich Aucklanders now looking for a foothold in the New Zealand capital too,” comments Everett-Allen.
Oslo (21.7 per cent) is now Europe’s strongest-performing city, although Budapest (19 per cent) is not far behind.
In Oslo falling unemployment, record low interest rates and strong purchasing power has boosted demand. The Dutch cities of Amsterdam, Utrecht and Rotterdam represent another centre of growth in Europe, all recording double-digit annual price rises. Here, a lack of supply is the key determinant of accelerating prices.
Shanghai leads city house price growth
6th February 2016
Shanghai is leading house price growth in the world’s major cities, as China rises to top of Knight Frank’s Prime Global Cities Index. Shanghai saw prime house prices rise by 27.4 per cent year-on-year in Q4 2016, ahead of Beijing (26.8 per cent) and Guangzhou (26.6 per cent).
The three Chinese cities are the only ones to record growth of greater than 25 per cent – far above the 4 per cent recorded on average by the 39 cities tracked by Knight Frank’s index. Overall, the first half of 2016 saw values jump 2.8 per cent, a rate that dropped to 1.2 per cent during the second half of the year.
However, China’s growth in Shanghai, Beijing and Guangzhou is not indicative of a nationwide trend; the cities are seeing values fuelled by rising household wealth and a lack of supply, but cooling measures introduced at the end of last year are already starting to have effect.
Australia and Canada are seeing a similar trend unfold, as Toronto (15 per cent), Vancouver (15 per cent), Sydney (9 per cent) and Melbourne (9 per cent) all enjoy double-digit (or near-double-digit) property price growth, with low interest rates and strong international demand pushing up values. Measures have also been taken to cool price inflation on a state and city basis in both countries, which are starting to weigh on the rate of growth.
London, meanwhile, has seen house prices slide 6 per cent, following recent stamp duty changes, and Hong Kong saw its price groth of 2.1 per cent held back by the increase in double stamp duty rate to 15 per cent in November 2016.
“New York’s luxury sector faced notable headwinds in 2016,” comments Knight Frank’s report. “The strong US dollar negated some overseas interest and the delivery of a large number of luxury new projects helped inflate supply. But while volumes slowed, prices proved resilient. With President Trump xpected to embark on a programme of fiscal stimulus, reduced regulation and infrastructure investment, there is potential for stronger growth in 2017.”
Taxes weigh on Vancouver and London property prices
31st October 2016
Newly introduced taxes are weighing upon the property markets of Vancouver and London, with growth slowing considerably in the third quarter of 2016.
Vancouver remains the number one city in the world for prime house price growth, according to Knight Frank, with values rising 31.6 per cent in the 12 months to September 2016. On a six-month basis, too, Vancouver leads the way with price growth of 15.2 per cent. Since March 2016, though, the city has introduced a new 15 per cent tax on foreign investors, designed to cool down the market amid concerns of unaffordability.
The early indicators are that it has had the desired effect, as investors look elsewhere and price growth slows from 8.1 per cent in Q2 2016 to just 1.5 per cent in Q3 2016.
Knight Frank predicts that the city will lose its top spot next quarter, citing talk of a further tax on vacant homes as slowing sales.
London, too, has introduced higher tax bills, with investors now facing new stamp duty rules, which make costs higher for wealthy buyers. In the year to September, London’s prime prices fell by 2.1 per cent, which Knight Frank highlights as proof that stamp duty has a bigger sway over the market than the EU referendum.
Despite an average annual growth rate of 3.8%, 18 of the 37 cities tracked by our index saw their rate of price growth slide compared with last quarter.
Toronto, Sydney and Melbourne have also seen new taxes imposed in the last 12 months, with their prime property price growth cooling to 1.2 per cent, 1 per cent and 2.9 per cent respectively. Seoul is now leading global prime price growth on a quarterly basis, with values up 8.2 per cent from Q2 2016.
Chinese cities, such as Shanghai (23.4 per cent), Guangzhou (14.3 per cent) and Beijing (7.1 per cent), meanwhile, dominate the top 10 rankings, although a range of measures are expected to cool down the markets in the coming months. Hong Kong, on the other hand, has seen prices rebound 4.1 per cent, driving by rising sales.
Dublin is the strongest performer in Europe, with prices up 5.5 per cent year-on-year, with Paris the weakest (down 3.8 per cent).
While taxes have had an impact in the last three months, though, the agency forecasts currency exchange rates to be the biggest driver of international demand and activity, as Brexit negotiations impact the pound and ripple out to other already-fluctuating currencies.
“Investors are increasingly looking to the US as their safe haven of choice as the world economy stutters, but a strong dollar will have repercussions globally,” comments Knight Frank.
Will Vancouver’s new tax cool its property price growth?
10th August 2016
Vancouver remains the city with the fastest rising house prices in the world, according to Knight Frank, but will its new tax on foreign investors cool that growth?
The latest Knight Frank global cities index increased by 4.4 per cent in the year to June 2016, its highest rate of growth over the last two years. Vancouver recorded the strongest price inflation, with prime prices surging 36 per cent.
“Other top performers this quarter include Shanghai, Cape Town, Toronto, Melbourne and Sydney; all saw annual price growth reach double figures in the year to June,” comments Kate Everett-Allen, Head of International Residential Research at Knight Frank.
Indeed, a breakdown by world region shows Australasia is on top, with prime prices increasing by 11 per cent on average year-on-year. Hong Kong is home to the weakest performing luxury residential market, with prime prices down 8 per cent over the 12-month period.
Annual price growth in Rome and Madrid, meanwhile, now exceeds that in London and New York.
In a year’s time, though, the index could look very different, as Vancouver’s 15 per cent tax on foreign property buyers leads a string of similar measures from markets around the world.
“Vancouver joins an expanding club of cities (which includes Hong Kong, Singapore, Sydney, and Melbourne) where policymakers are taking steps to control the flow of foreign capital into their housing markets in order to stem demand and improve affordability for local residents,” adds Everett-Allen.
“The majority of our top ten ranking cities have been on the receiving end of new cooling measures in the last 12 months. From interest rate hikes to fees for foreign buyers, higher land taxes, or new rules on the number of second homes that can be acquired, lowering price inflation is high up government agendas which suggest that a year from now the cities populating the top ten rankings could look very different.”
Soaring Vancouver prices buck global trend
6th May 2016
Vancouver’s property prices are soaring at the start of 2016, bucking a global trend of moderating growth.
Knight Frank’s latest Prime Global Cities Index is led by Vancouver for the fourth consecutive quarter with prime prices in the city increasing by 26 per cent in the year to March 2016.
“A severe lack of supply is creating an upward pressure on prices. There is little evidence that February’s increase in land transfer tax, from 2 per cent to 3 per cent, on all purchases above CAD2m has dented sale volumes,” comments Knight Frank’s report.
Three other cities – Shanghai, Sydney and Melbourne – also recorded double-digit annual price growth in the year to March 2016, but the gap between this top tier and the remaining cities has widened. Indeed, prime prices across the 35 cities increased on average by 3.6 per cent in the 12 months to March 2016, continuing the index’s average annual growth of between 3 and 4 per cent in the last seven quarters.
Prices in Paris dipped 3 per cent in annual terms, but prices stabilised over the last quarter as French buyers, having recognised value in their capital’s market, increased their market share. In fact, no city has recorded a double-digit annual decline in prices since Q2 2015. Even in New York and Miami, where cash buyers now have to comply with new transparency rules above set price thresholds, continue to record steady price growth.
Turkey leads global house price growth
15th March 2016
Turkey is home to the fastest-growing house prices in the world, according to new figures.
The country saw property values soar 18.4 per cent in Q4 2015, with quarterly growth also leading the way at 3.6 per cent.
The overall index highlights the strength of buyer confidence around the world, with Knight Frank’s prime index rising 3 per cent in 2015 overall, up from 2.3 per cent in 2014, despite concerns over the global economy.
Indeed, 43 of the 55 housing markets tracked by the agency saw prices rise, up from 10 countries in the after of Lehman’s collapse in Q2 2009.
House prices in former leader Hong Kong increased in 2015, but the rate of growth has slowed significantly from 17 per cent in the year to September to 7 per cent in the year to December 2015. The slower rate of growth is attributable to rising supply (more than 11,200 homes were completed in 2015), as well as China’s financial market volatility and the expectation of increasing interest rates. (Data from China’s National Bureau of Statistics shows house prices rose marginally in 2015 by 0.4 per cent having reached their peak in the first quarter of 2014.
Australasia was the strongest-performing world region in 2015, buoyed by the strong performance of New Zealand and Australia, both of which saw annual price growth in excess of 10 per cent. Indeed, New Zealand was the second fastest-growing market in the final three months of the year, with prices surging 14.2 per cent year-on-year, ahead of third place Sweden on 12.3 per cent.
“Housing affordability, or the lack of it, is rising up policymakers’ agendas worldwide,” writes International Residential Research Partner Kate Everett-Allen. “According to the latest data from the OECD, which measures house prices against incomes for 24 of its 34 members, Belgium and New Zealand are currently the world’s least affordable markets, whilst home ownership is most accessible in South Korea and Japan.”
Outlook for 2016 is “muted”, due to a “potentially dangerous cocktail” of low oil prices, a strong dollar and a continued slowdown in China. In the UK, meanwhile, there are now concerns surrounding the impact of a potential Brexit this June.
The sentiment in Turkey, however, is positive, with the country increasingly viewed as a safe haven for Middle Eastern investors. “Turkey is bridging East and West whilst also seeing strong population growth,” comments Everett-Allen.
Turkey was recently ranked by PwC and the Urban Land Institute as one of the top European cities for investment and development prospects, thanks to the country’s thriving population.
According to the latest figures released by the Turkish Statistical Institute (TurkStat), house sales to foreigners increased by a remarkable 20.4 per cent in 2015 compared to the previous year and it is buyers from the Arab Gulf nations that are at the front of the queue for properties.
Responsible for a substantial 39.5 per cent of all sales to international buyers, the top three nations investing in Turkey’s real estate have been revealed as Iraq, Saudi Arabia and Kuwait.
On TheMoveChannel.com, interest in Turkey property climbed in January 2016, with enquiries up 123 per cent week-on-week in the seven days from 20th January and up a further 127 per cent in the following seven days.
“One month into the first quarter of 2016 and enquiries for Turkish property on TheMoveChannel.com are already over half the figures recorded in the whole of the fourth quarter of 2015,” commented Dan Johnson, Director of TheMoveChannel.com, in our most recent Top of the Props report.
Adil Yaman, Director of Universal 21, the largest management company based in Istanbul, comments: “2015 was a strong year for international sales in the Istanbul property market and we are confident that the trend will continue throughout this year.”Google+