Global real estate prices rise at highest rate for 16 years

Global real estate prices rise at highest rate for 16 years

Unlike some sectors of the economy, property markets have enjoyed a boom since the pandemic began. Countries as diverse as the US and Brazil have both experienced a substantial rise in their markets over the last 18 months. And according to the latest research, this pattern is shared across the world as global real estate prices rise at their highest rate since 2015

Global real estate prices go up by 9.2% 

The latest research from Knight Frank reveals that property prices rose by 9.2% worldwide in the year to June. The figure is the highest for 21 years. 

The latest Global House Price Index looked at real estate in 55 countries and territories and found that the general trend is definitely on the up. A third of the markets (18) in the survey had double-digit growth. This translates to the highest percentage since Q1 2019 and up from 7 a year ago. 

chart showing global real estate prices since 2019

However, the ballpark figures hide big variations between developed and developing countries. In ten of the former, real estate prices went up by 12%, while key developing markets saw a more contained increase with an average of 4.7%. 

Biggest price hikes 

Turkey real estate led the table with the highest rise – prices soared by 29.2% in the year to June. In second place was New Zealand, a regular top ranker in global real estate prices. Here, homes saw a hike of 25.9%. 

Other high-flyers were the US (up 18.6%), Australia (up 16.4%) and Canada (up 16%). For Australia, the Q2 figures revealed the biggest yearly price growth since 2003. 

Reasons behind the increases 

Lockdowns and travel restrictions have trained the spotlight on our homes and their space. And as a result, millions of households worldwide have felt the need to move to larger and higher quality properties. 

The trend to relocate to quieter areas and suburbia has been almost universal. As too has the requirement for extra room for home offices and private outside spaces. As a result, housing markets have seen unprecedented demand that has, in turn, pushed prices upwards. 

Contained markets 

At the other end of the scale, several markets worldwide showed a more steady rise in prices. This was the case with China, whose annual increase (4.3%) was the same as last year. Brazil property, with a 4.8% uptick and Japanese (up 5.1%), registered similar patterns. 

In Jersey, real estate prices remained static and in Cyprus, Romania and Malaysia, the increases were negligible. Of the 55 countries in the Global House Price Index, just two – Spain and India – saw prices drop in the 12 months to June. However, in both cases, the decrease was less than 1%. 

End of a cycle? 

Despite the 9.2% average rise in global real estate prices, Knight Frank points out that there are signs of a slowdown in some markets. The US is a case in point – in Florida, for example, analysts believe that the market is now approaching ‘normality’ after the frenzied pandemic activity. 

According to the Index, buyer sentiment in the US in June was its lowest for ten years. In addition, the prospect of rising interest rates may also dampen the market, particularly in New Zealand, the UK and US. 

(Source: Knight Frank)