Knight Frank – Global Residential Cities Index

An aerial view of Cape Town Central City.
An aerial view of Cape Town Central City.

Cape Town’s residential property prices continue their upward trajectory at 6.0% overall, with Johannesburg at 1.6% for the first quarter in 2017 through to the first quarter of 2018. This is despite the slowest growth rate recorded globally since 2015’s third quarter. 

This is according to the latest Global Residential Cities Index Q1 2018 which was recently released by Knight Frank to reveal average residential prices across 150 cities rising by 4% in the year to March 2018, down from 6.4% a year ago.

Cape Town continues to shine in the global property landscape with a healthy growth in residential property prices compared to that of 150 other capital cities around the globe, underpinned by our position as an international tourism and lifestyle investment destination, and backed by exponential development in local creative and tech industries” commented Richard Hardie, CEO of Knight Frank South Africa’s residential division.

Although the global economy continues to perform well, the IMF forecasts 3.9% growth in 2018, increased vigilance on the part of policy makers keen to use macro prudential measures to curb price inflation along with escalating affordability constraints set to keep a lid on urban price growth.

International Index Outtakes

Just twelve months ago, twevle cities exceeded 20% growth per annum, this quarter only one international city falls into this category; the Indian city of Surat. Located on India’s west coast, the city has recorded a spike in price growth due to an inordinately low base in the first quarter, caused by the unprecedented demonetisation of high value currency in the country.

Europe’s upward trajectory continues. Eleven of the top twenty cities ranked by annual growth are in Europe. Rotterdam (14.8%), Edinburgh (12%), Porto (11.7%) and Sofia (11.3%) now join long-standing front runners such as Berlin (14.9%), Budapest 14.4%) and Reykjavik (11.8%).

The index tracks ten Canadian cities and according to the National Bank of Canada, which tracks average prices across each metropolitan area, Vancouver continues to outperform with annual growth of 15.4%. This underlines the divergence with the prime market where prices increased by just 0.2% over the same period.

Seattle (12.9%) continues to lead the 15 US cities tracked by the index, buoyed by a simple lack of demand in the face of escalating demand. Second only to San Francisco as the United States’ main technology hub, the city saw US$10.4 billion of real estate investment in 2017.

In the US, despite three rate rises in the year to March 2018 (and a fourth since) average prices across the 15 cities included in our index increased by 6.8% over the 12-month period. The comparable figure for the UK’s eight cities is 4.9% with Edinburgh out in front and Aberdeen the weakest performer.

Southern Europe is increasingly polarised. Whilst Italian cities are well-represented at the foot of the table, Spanish and Portuguese cities are registering stronger growth. Porto, Malaga and Madrid all sit high in the rankings with annual growth of 11.7%, 10.4% and 10.3% respectively.

Divergent markets are evident not just at a regional level but at a country level as well. The ten countries with the largest gap between their strongest and weakest performing city is synonymous with a list of the world’s largest economies; all  ten occupy a seat at the G20. India leads the list with a gap of twenty-seven percentage points between Surat (22%) and Delhi (-5%) (figure 3).

Read more here: Knight Frank Global Residential Cities Index