International prime residential property prices continued an upward trajectory during 2024 with a 3.6% increase compared to 2023’s 3.3% according to Knight Frank’s The Wealth Report.
Of the 100 markets tracked, 77 recorded positive annual price growth with the Asian and Middle Eastern markets dominating the list. Saudi Arabia’s markets performed strongly with Riyadh (16%) and Jeddah (9.6%) both in the top six.
Knight Frank says the improvement in the annual growth rate during 2024 was driven by strong regional performance in the Middle East (7.2%) and Latin America and the Caribbean (6.3%) while Europe lagged at 2.5% with high interest rates, slowing economies, and weakened consumer confidence weighing on activity in some key markets.
There were, however, bright spots, especially in key second home markets. North America recorded growth of 2.4%, held back by weaker growth in Canadian prime markets and some US markets such as Miami which slowed after recent strong growth.
With average growth of 3.7%, ‘sunbelt’ markets led city markets (3.5%) and ski destinations (2.6%). The year’s strong showing from resort markets continues the trend seen since Covid-19 with nearly 30% growth in value in these markets against 25% for ski markets, and cities lagging, posting only 19% growth.
“Even for prime markets, interest rates remain the key story. Rates are still very high in most developed markets compared with where they were as recently as 2022, but the past 12 months have seen central banks move decisively into a new era, with cuts outpacing rate rises for the first time in three years. While the direction of travel is positive for house prices and has supported the growth we have seen in over three- quarters of markets, the reduction in debt costs is still not sufficient to turn this into a trend in most markets. It will take additional rate cuts during 2025 to restore momentum,” says Liam Bailey, global head of research at Knight Frank.
On the supply side, a lack of newbuild inventory is still impacting many markets. Disruption to supply chains, high build cost inflation, and wage hikes, have all conspired to reduce delivery of new luxury projects. In Central London, as an example, new-build activity is currently running 25% below the ten-year average.
Aside from new-build volumes, a low inventory of existing homes to buy is also supporting prices. The collapse in property listings, a feature of prime US markets in 2023 and early 2024, has eased recently but markets such as New York are still seeing listings 10% to 20% below the five-year average. On the demand side, while buyers are price conscious, especially with relatively high debt costs, there remains strong appetite for residential property among wealthy buyers.
“It is no surprise that Cape Town has continued to show a steady growth of 5.1%. Lifestyle offerings and affordability has proved a constant attraction to foreigners looking for second homes and is high on the list for many holiday makers across Europe,” comments Nick Gaertner, Director and COO of Knight Frank South Africa.
“We have also seen a surge in demand from the local South African market since the elections in June last year, with many families looking to move to the Mother City from other provinces within the country. In the coming 12 months it is expected that prices will continue to rise as demand is significantly outstripping supply.”
“Over the past five years a number of markets have seen significant upwards repricing, with Dubai leading with a 147% rise. This year’s second strongest market, Manila, has seen consistently strong growth over the same period with an 87% rise powered by an expanding economy and interest from expat Filipinos reinvesting in the city. It is the US, however, which had the biggest cluster of growth markets over this period. Palm Beach (117%), Miami (84%) and Aspen (73%) are the standout performers, where the strength of the US economy and investment markets has fed through to substantial price rises,” notes Bailey.
