The final Prime Global Cities Index of 2021 revealed that prices in the world’s 46 largest cities went up by nearly 10%. Almost across the board, house prices increased and many destinations saw double-digit upticks. Dubai and Moscow saw the highest rises while European cities experienced more modest growth.
Fastest price rises since 2007
According to the latest Prime Global Cities Index (Q4 2021), house prices rose by 9.8% in the year. The uptick contrasts strongly with that seen a year earlier when values went up by just 3.6%.
Knight Frank’s research found that all but 4 of the 46 cities included in the Index experienced price increases. And the overall rise in prime global real estate was the highest since 2007.
Probable causes of the significant rise in the Index lie in several factors. They include low mortgage interest rates, accrued household savings and the demand for different living spaces. In addition, working and schooling from home trends have had lasting effects on the housing market and boosted demand for larger homes. All factors have boosted the global real estate market.
Dubai and Moscow lead the table
After mixed fortune over the last few years, Dubai is back to leading the board for house price increases. Prices went up by 44.4% in the year to Q4 2021. The Index attributes this giant leap to the relative value of property in Dubai, the government’s handling of the pandemic and the lifestyle available in the emirate.
Hot on its heels was Moscow, where house prices soared by 42.4%. Attractive mortgage schemes and low supply are the likely causes of the big increase.
Other winners
Miami was some distance from Dubai and Moscow, taking third place with a 28.2% uptick in real estate prices. Completing the top five were Seoul (up 21%) and Toronto (up 20.3%).
Some European cities also saw a boom in house values, particularly Stockholm which had the highest increase (10.8%). Berlin, Zurich and Monaco were all close behind with a rise of over 10%.
However, other cities in Europe experienced a lacklustre year for house prices. They included London and Frankfurt, where real estate increased by just 1.3% in value in 2021.
Cities in negative territory
Just four of the cities in the Index experienced negative price growth last year and all four were in Asia. Bangkok saw the biggest drop – real estate in the Thai capital lost 3.6% in value. Property in Manila went down by 1.5% and homes in Kuala Lumpur and Jakarta also decreased in price, by 0.9% and 0.4%, respectively.
Quarterly movers in prime global real estate
The leader board was almost a mirror image of the annual results in quarterly terms. Moscow took top position with a 24.6% increase in house prices between Q3 and Q4 last year. Next was Dubai real estate, up by 11.6% and then, homes in Toronto (+8.8%). Australia also featured in the top five, with the Gold Coast in fourth position (up 7.8%).
In store for 2022
The Index points out that the 2021 price hikes in global real estate will attract the attention of governments and policymakers who may be keen to temper the market. As a result, Knight Frank expects more regulation this year and higher interest rates. In the US, they are already higher than a year ago.
(Source: Knight Frank)
