Savills News

Slowdown across world cities prime residential markets continues

Savills World Research recently announced Savills World Cities Prime Residential Index 1H2019. Price growth across the world’s leading prime city housing markets has continued to slow during the first half of 2019, due to Government policy, the cost of money, increased supply and global economic uncertainty.

Price growth across the world’s leading prime city housing markets has continued to slow during the first half of 2019, rising by just 0.4%, taking the annual growth to 0.7%. This compares to an annual increase of 5.1% in the year to June 2018.

“There are a number of reasons why the prime residential markets in global cities are seeing a slowdown, with Government policy, the cost of money, increased supply and global economic uncertainty all playing their part,” says Sophie Chick, head of Savills World Research. “Despite this, we do not expect significant price falls across the index, but that growth will remain flat or experience small increases in value in the medium term.”

Latest data from Savills World Cities Prime Residential Index shows that Berlin and Paris have seen stand out growth for prime residential property of approximately 4% over the last six months and 8% over the last year. Both markets have low supply levels coupled with increasing demand from domestic and international buyers.

The six months to June 2019 also marked a turning point for a number of Chinese cities as prices increased following falls during the second half of 2018. This follows a slight loosening of housing restrictions as their economy slows. Hong Kong, which still has the most expensive residential property in the world at US$4,730 per sq. ft. / €45,400 per sqm, saw growth of 1.3%.

A similar pattern was seen in Moscow where prices increased by 1.2% following years of price falls as Russian money returns to the capital due to scrutiny of Russian money overseas.

Elsewhere in Asia, Kuala Lumpur and Bangkok, where prices are US$260 and US$880 per sq. ft respectively, both saw prime prices rise by nearly 2.5% in the first half of the year. 

Conversely, many of the cities in the US have seen price falls overs the first six months of 2019 due to recent tax changes impacting demand and, in the case of New York and Miami,  high levels of stock on the market.

In Sydney and Cape Town, values have increased significantly over the past five years but are now experiencing price falls as affordability, amongst other things, slows the market. Prime prices in Dubai have fallen 20% in the last five years and are still falling due to high levels of new build stock and global economic uncertainty.

Savills World Cities Prime Residential Index - capital values price per square foot and price movements in local currency – cities ranked by half year growth

City

Half year growth to June 2019

Full year growth to June 2019

Five year growth to June 2019

10 year growth to June 2019

Price PSM

($)

Berlin

4.2%

8.2%

54.7%

122.4%

$10,221

Paris

3.9%

7.6%

18.8%

52.7%

$16,961

Beijing

2.9%

2.9%

86.0%

283.1%

$15,950

Kuala Lumpur

2.4%

2.0%

13.7%

84.2%

$2,920

Bangkok

2.3%

4.7%

42.1%

121.9%

$9,547

Hangzhou

2.2%

2.1%

40.8%

74.6%

$10,446

Shenzhen

1.9%

1.7%

96.6%

323.8%

$15,950

Hong Kong

1.3%

0.9%

41.6%

121.1%

$50,995

Moscow

1.2%

-0.4%

-15.1%

24.2%

$13,591

Shanghai

1.0%

2.8%

25.4%

101.8%

$18,870

Tokyo

0.9%

2.7%

46.1%

49.2%

$23,251

Guangzhou

0.8%

0.7%

48.7%

86.6%

$12,917

Barcelona

0.7%

2.1%

-

-

$6,964

Madrid

0.1%

0.9%

14.9%

-11.3%

$7,863

Los Angeles

-0.1%

-0.5%

32.8%

83.0%

$14,939

London

-1.0%

-2.8%

-18.1%

36.3%

$19,881

Singapore

-1.1%

-1.2%

2.5%

49.7%

$16,849

Cape Town

-1.2%

-2.8%

64.4%

-

$3,482

New York

-1.8%

-4.8%

7.1%

40.5%

$27,182

Dubai

-1.9%

-3.8%

-19.8%

-1.7%

$6,402

Sydney

-2.3%

-2.8%

43.1%

74.7%

$17,298

Miami

-3.4%

-3.5%

11%

54.8%

$10,558

San Francisco

-3.0%

-0.9%

38.2%

88.8%

$17,073


Sophie Chick continues, “Over the short term, we expect to see European cities continue to outperform as they benefit from Brexit and comparably lower pries on a global scale. Over the long term, wealth generation will be critical to the growth of the city’s prime residential markets along with political and economic stability and favourable demographics.” 

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