Property price growth slowing in many global cities but Berlin see strongest rise

Property prices in key cities around the world increased by 4.5% in 2017, down from 7% a year earlier as markets slowed but Berlin bucked the trend with annual growth of 20.5%, the latest global index shows.

Seville and Hong Kong were the most improved city markets with annual growth of 7.4% and 14.8% respectively, up from -9.9% and 4.3%, while Chinese cities registered a marked slowdown in 2017 averaging growth of 1.6%, according to the Knight Frank index which tracks 150 cities.

At the end of 2016 some 12 cities, most of them Chinese, registered price growth above 20%, a year later only Berlin did so. According to Kate Everett-Allen, head of international research at Knight Frank, strong population growth, a stable economy, record low unemployment and robust interest from overseas investors are together propelling prices higher in the city.

Meanwhile, she pointed out that in China with fiscal stimulus being withdrawn, capital controls being put in place and the beginning of a shift towards the normalisation of monetary policy, annual price growth above 20% is now confined to only a few outer cities.

Chongqing is now the frontrunner in mainland China with previous hot markets such as Shenzhen and Beijing slipping down the rankings. Indeed, prices fell by 0.2% in Beijing.

She also pointed out that in the United States cities averaged 6.3% growth in 2017 despite four interest rate rises since December 2016. Seattle and San Francisco recorded the highest price growth at 12.7% and 9.3% respectively.

Vancouver rebounded from 21st to fourth place as supply shortages reignited price growth. ‘The 15% foreign buyer tax has influenced luxury prices more than the mainstream market but with a raft of new cooling measures announced following February’s Budget the city may yet see its rate of growth soften,’ said Everett-Allen.

Overall, the second highest growth was in Izmir in Turkey with prices up 18,5%, followed by Reykjavik up 16.6%, Vancouver up 16%, Hong Kong up 14.8%, Budapest up 15.5%, Hamburg up 14.1%, Munich up 13.8%, and Rotterdam and Frankfurt both up 13.4%.

At the bottom end of the index Abu Dhabi has seen prices fall by 9.1%, Lima down 8.4%, Turin down 8.3%, Delhi down 7.2%, Darwin down 6.3%, Genoa down 6.2%, Kiev down 5.1%, Palermo down 4.6%, Rio de Janeiro down4.4% and Dubai down 3.8%.

In the UK in London prices increased over the year by just 2% but Edinburgh saw prices rise by 10.3% while they rose by 8.8% in Glasgow, by 6.9% in Birmingham, by 6.8% in Nottingham, and by 6.4% in Bristol and Manchester.