The global trend of growth in house prices continues: according to research data from Knight Frank, according to the results of the second quarter of 2021, in 18 countries there were recorded double-digit price growth rates, for the year in 55 key countries prices increased by an average of 9.2%, and the leader Turkey becomes for the sixth quarter in a row
The Global House Price Index (GHPI) is an index that allows you to track and compare the price dynamics of housing markets in national currency in 55 countries. According to the results of the second quarter of this year, the average annual growth in prices in these countries amounted to 9.2%. For comparison: in the last quarter it was plus 7.3% and in the second quarter of 2020 – plus 4.7%. In 18 countries, double-digit indicators were recorded, and 13 of them were representatives of the Old World.
Sweden closed the top five, where real estate prices increased by 17.2%. The third place was shared by the USA and Slovakia (18.6% each).
“In the second quarter of 2020, the United States occupied only 30th place (plus 4.5%), while Slovakia was in the top ten (sixth place, plus 11.2%). However, the US market is showing weakening demand: the volume of requests for mortgages has decreased, and the number of buyers who considered the second quarter the best time for a deal reached a ten-year low: only 28% supported this opinion”, Knight Frank analysts emphasize.
Silver and gold were “won” by New Zealand (25.9%), which occupied only 11th place a year earlier, and now holds second place for the fourth consecutive quarter, and Turkey (29.2%) gives the palm for the sixth quarter in a row, although the price dynamics in the country begins to slow down: in the last quarter it reached 32%.
Each of these countries has its own specifics, and the reasons for the price increase in New Zealand and Turkey are different.
In New Zealand, the main reason for the rapid growth is low-interest rates on mortgages and a lack of supply that has formed over the past decade: few building permits were issued, so little was built. The country has successfully survived the pandemic, the economy is booming, and people with opportunities see real estate as a reliable way to invest. For the last year and a half, a significant part of transactions in New Zealand was carried out with a speculative purpose, as they say, in reserve – for them this is the fourth, fifth, sixth house or apartment.
In Turkey, the numbers are actually somewhat misleading. Yes, of course, the growth of property in Turkey is very, very solid, but, firstly, it is growth in lira, and the lira is not the most stable currency, and inflation, which in Turkey in the last year is also decent, eats up a significant part of this growth.
About a year and a half ago, the Turkish authorities made a preferential mortgage program for local residents, and, accordingly, the Turks themselves began to buy more actively. But if we evaluate Turkish growth in euros or in dollars, then the figures will be much more modest, although prices increased by 8-10% in dollars and in euros too.
Interest of Russians
By the way, Turkey is one of the most demanded destinations among Russians today. According to Turk.Estate portal, in August 2021, Russian demand for buying real estate in the country increased by 76.26% compared to the results that were recorded in August 2020.
True, in comparison with July, August demand turned out to be slightly lower, however, following the results of eight months, from January to August, it increased by 21.48% compared to last year. So Russia is consistently among the top 3 countries whose citizens are especially interested in Turkish real estate.
Russians continue to be interested in foreign destinations, both for their own residence and for the purpose of investing in order to preserve capital and generate rental income. The rating shows an active growth in real estate prices in such popular locations as the United Kingdom (plus 13.2%), Switzerland (plus 7.1%), and France (plus 5.8%).
In particular, the investment demand for London is clearly visible, which is due, among other things, to the high activity of high net (clients with large amounts of money) all over the world. The gradual price recovery that began after Brexit and the lull in the pandemic led to growing demand against the backdrop of attractive prices and the possibility of purchasing real estate on favorable installment terms.
Among all 55 countries participating in the Global House Price Index, only two went into the price minus: India (minus 0.5%) and Spain (minus 0.9%). As noted in Knight Frank, this is the smallest number of countries with negative dynamics since the first publication of the GHPI.
As for Russia, it took tenth place in the current GHPI with an indicator of plus 14.4% thanks to the introduction of government support measures. In the last quarter, it was in ninth place (plus 11.1%), and a year ago – in 14th (plus 8.1%).
In the second quarter of 2021, in 46 cities of the world, the average growth rate of prices for luxury housing was 8.2%, which is a record since 2008.
According to the company, Toronto topped the rating, with prices for the elite segment of housing increasing by 27%. The top three were Shanghai – +21.4% and Guangzhou – +19.8%. Miami is in fifth place with a price increase of 18.7%. Moscow moved from fourth to sixth place – +17.6% per year, +6.5% per quarter.
It is noted that the growth in the cost of housing caused by the coronavirus pandemic is typical for all segments of real estate, but the dynamics in the elite sector are more significant.
For comparison, the average annual price increase in 46 cities was 8.2% (+4.6% in March 2021; +0.9% in June last year). At the same time, in 13 of them, the indicator was expressed in double digits compared to the II quarter of 2020, when only Manila (+14.4%) experienced such dynamics.
Knight Frank analysts note that London, New York, Paris, and Dubai are expected to rise in the rankings in the third quarter of this year as travel restrictions ease and demand from international buyers rises.