Prime residential markets’ capital values record fastest growth in 5 years

Sydney and Seoul were among the top 10 cities that recorded the biggest % change.

The resilience of the world’s residential property markets has continued unabated in the first half of 2021 says global real estate advisor, Savills.

Across the 30 cities in the Savills World Cities Index, capital values grew by an average of 3.9% over the six months to June 2021, the fastest rate since December 2016. Please see details below and attached. 

Sustained record-low-interest rates, improved buyer confidence, increased transactions at higher price points, and economic stimulus measures have all contributed to the strong property price growth.

This strong growth follows a more subdued period as values from June 2018 to December 2020 only grew an average of 0.7% as a result of global uncertainty and tax and policy changes in many cities. This low growth was exacerbated by the pandemic in 2020, which had the additional effect of lockdowns shuttering property markets in many cities. 

Not all cities performed equally over the past six months. Over 70% of the locations had positive capital value growth for the first half of the year. The cities which posted negative capital value growth are unified in their historical reliance on international buyers in their prime markets, a segment which has been severely limited by travel restrictions.

The highest capital value growth can be found in the Chinese cities with six month growth figures between 7.9% in Guangzhou and 13.7% in Shanghai. Price rises in China have accelerated in 2021 despite tightening of financing and local policy changes in an attempt to cool the markets. Lending-fuelled purchases have been driving Chinese property price growth in recent years, with buyers believing property is likely to remain the safest investment in China.

In the United States, Los Angeles and Miami lead with growth above 9% in the first half of 2021.. Miami has benefited from domestic migration to the city as a result of increased remote working, favourable local taxes, an influx of tech and finance companies, and the enhanced buying power from low-interest rates.

For markets which are still recording negative capital value growth, such as Paris and Mumbai, lower transaction volumes over the past year have played a significant role. These cities suffered prolonged lockdowns which dampened sales and damaged buyer confidence. In New York, prices have declined for over four years because of oversupplied markets but signs point to prices stabilising this year as transactions increase.

Some cities have seen price changes go from negative to positive territory in the first half of 2021. Singapore, Bangkok and Kuala Lumpur all benefited from increased demand for decreased supply. The work from home boom and resulting increased need for space helped to push up capital values in Dubai, Cape Town, Moscow and Lisbon. 

Kelcie Sellers, analyst, Savills World Research, said, “The return of international travel is likely to provide an increased supply of buyers for prime properties.

“Sustained economic recovery globally is forecast to further support buyer confidence and boost demand. Though a degree of pandemic-related uncertainty remains, the prime residential sector is likely to remain strong through the rest of the year.”