Don’t worry about falling house prices in the UK – property values are falling globally for the first time in more than a decade.
Data from international estate agents Knight Frank revealed the big drop is taking place around the world and is not only a UK phenomenon.
The firm tracks luxury property prices in popular cities for expats and the wealthy and reckoned values fell by 0.4 per cent in the year to the end of March.
This is the first and only global drop since the great financial crisis of 2008 – 09. Since then, prices have gone up roughly five per cent a year, peaking at 10.1 per cent in the last quarter of 2021.
Knight Frank experts explain higher interest rates have knocked the wind out of the global housing market even for the wealthy.
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Cities See Huge Price Drops
One in three of the monitored cities has seen a drop in values, while the rest are still rising.
But the large price slump in some areas is so big, the index has been dragged into the red – and only eight cities posted more than five per cent growth.
Homeowners in New Zealand have suffered the worst. The three worst-performing monitored cities are all in New Zealand and have seen prices plunge by between 15 and 27 per cent in the past year.
Liam Bailey, global head of research at Knight Frank, said: “New Zealand’s prime markets saw very strong growth during the pandemic.
“This growth was driven by pandemic lifestyle purchases but also by sharply lower interest rates, which fell from 1.75 per cent pre-pandemic to 0.25 per cent during 2020 and 2021.
“Since then, the sharp rise in the New Zealand bank rate – from 0.25 per cent to 5.25 per cent – has pulled pricing sharply lower.”
Dubai Property Prospers
At the other end of the rankings is Dubai, United Arab Emirates. Property has had a tough time in the UAE in recent years, but posted some massive rises in the past year.
In Q3 2022, Dubai property prices exploded with a 44 per cent increase, followed by another spectacular rise of 25 per cent in Q4 2022, only to be followed by a 3 per cent drop in the first three months of this year.
To put the statistics in perspective, the only other city showing a double-digit increase in property prices for the period was Miami, USA, which was up 11 per cent in Q3 2022. THis surge was followed by a 3.5 per cent fall in the next quarter and a zero change in Q1 2023.
Bailey dumps the responsibility for falling global house prices at the door of central banks.
He said: “This latest index marks a sharp reversal from a peak of 10.1% growth in the fourth quarter of 2021. The slowdown in growth has overwhelmingly been driven by sharply higher interest rates following recent tightening in global monetary policy.
“Annual prices are now falling in 16 of the 46 markets tracked. While two thirds of markets are still seeing positive growth, the large size of price declines in the weakest markets has pulled the overall index negative.”
Global Property Price Rankings
These are the latest global property price statistics for luxury homes, provided by property consultancy Knight Frank.
The rankings show that although prices are still rising in 27 of the tracked cities, six reported no change in values, while the remaining 13 recorded losses.
Bailey said: “It is likely that even prime housing markets will experience continued downward pressure on prices for the next few quarters. That said it is unlikely we will see a correction similar in scale to that seen during the Global Financial Crisis, when the overall index fell 8.2% from peak to trough during 2009.
“There are early signs that some markets are seeing improvements, 46% of markets saw quarterly price falls through the second half of 2022, but only 28% did in the first quarter of this year, the lowest number since the first quarter of 2021.”
| Rank | City | Country | Percentage change | ||
| 12 month | 6 month | 3 month | |||
| 1 | Dubai | UAE | 44.20% | 25.10% | -3.30% |
| 2 | MIami | USA | 11.00% | -3.50% | 0.00% |
| 3 | Zurich | Switzerland | 9.40% | 0.10% | 0.70% |
| 4 | Berlin | Germany | 5.70% | 1.30% | 1.00% |
| 5 | Singapore | Singapore | 5.50% | 1.50% | 1.00% |
| 6 | Mumbai | India | 5.50% | 1.90% | 0.20% |
| 7 | Edinburgh | UK | 5.10% | -0.20% | -0.20% |
| 8 | Shanghai | China | 5.10% | 5.20% | 3.30% |
| 9 | Lisbon | Portugal | 4.60% | 2.20% | 0.90% |
| 10 | Nairobi | Kenya | 4.50% | 4.00% | 2.00% |
| 11 | Paris | France | 4.30% | 1.70% | 0.90% |
| 12 | Bangkok | Thailand | 4.20% | 0.90% | 0.70% |
| 13 | Madrid | Spain | 4.10% | 1.00% | 0.20% |
| 14 | Dublin | Ireland | 3.90% | 0.10% | 0.10% |
| 15 | Guangzhou | China | 3.50% | 0.10% | 0.80% |
| 16 | Bengaluru | India | 3.00% | 1.10% | 0.40% |
| 17 | Melbourne | Australia | 2.90% | 2.50% | 1.50% |
| 18 | Manila | Philippines | 2.30% | 1.90% | 1.50% |
| 19 | Tokyo | Japan | 2.10% | -3.40% | -7.60% |
| 20 | Geneva | Switzerland | 1.70% | -0.80% | -0.10% |
| 21 | Gold Coast | Australia | 1.60% | 1.50% | 0.60% |
| 22 | Delhi | India | 1.20% | 0.20% | 0.20% |
| 23 | Vienna | Austria | 1.20% | 0.00% | 0.00% |
| 24 | Bucharest | Romania | 1.10% | 0.50% | 0.20% |
| 25 | Kuala Lumpur | Malaysia | 1.00% | 0.90% | 0.30% |
| 26 | Beijing | China | 0.90% | 0.50% | 0.00% |
| 27 | Jakarta | Indonesia | 0.90% | 0.90% | 0.00% |
| 28 | Sydney | Australia | 0.60% | 3.20% | 1.40% |
| 29 | London | UK | 0.50% | -0.80% | -0.20% |
| 30 | Perth | Australia | 0.50% | 0.80% | -0.10% |
| 31 | Brisbane | Australia | -0.40% | 2.00% | 1.20% |
| 32 | Los Angeles | USA | -0.50% | -3.10% | 0.20% |
| 33 | New York | USA | -0.70% | -3.10% | -2.30% |
| 34 | KHong Kong | China | -1.30% | -0.80% | 0.00% |
| 35 | Taipei | Taiwan | -2.00% | 0.00% | 0.30% |
| 36 | Monaco | Monaco | -3.10% | -0.40% | -0.70% |
| 37 | Shenzhen | China | -4.90% | -2.40% | 2.00% |
| 38 | Seoul | South Korea | -9.00% | -9.60% | -3.00% |
| 39 | Vancouver | Canada | -9.40% | -4.40% | 1.20% |
| 40 | San Francisco | USA | -9.70% | -7.40% | -2.70% |
| 41 | Stockholm | Sweden | -11.00% | 1.70% | 3.20% |
| 42 | Frankfurt | Germany | -11.10% | -4.00% | -2.50% |
| 43 | Toronto | Canada | -13.40% | -3.50% | 4.80% |
| 44 | Christchurch | New Zealand | -15.30% | -10.50% | -6.10% |
| 45 | Auckland | New Zealand | -17.00% | -5.20% | -0.90% |
| 46 | Wellington | New Zealand | -27.20% | -10.40% | -8.60% |
Property Price FAQ
Luxury house prices in Dubai have rocketed by 149 per cent since March 2020.
The market is cooling after years of runaway prices. Although values seem to be crumbling, they are still 22 per cent higher than before the pandemic. Rising interest rates and massive cost of living rises have contributed to the dropping market.
It’s likely house prices will fall or tread water in the near future as central banks adjust interest rates to try to keep a lid on inflation.
There’s more to investing than picking a city or country. Other factors are important, like inflation, the type of property, whether you are buying a home to live in or to rent out and many more other factors. Generally, many European countries feature on the rankings because they have less land to build on, which pushes the price of land up.
Expats can buy or rent homes in many countries, especially those offering residence or citizenship by investment programs. However, the rules vary between countries and sometimes locations within a country. If you want to buy abroad, seek professional advice before agreeing any deals or signing contracts.
Related Information
Below is a list of related articles you may find of interest.
Resources
- Knight Frank Global Wealth Report: https://www.knightfrank.com/wealthreport
- Forbes: https://www.forbes.com/real-estate/
- Bloomberg: https://www.bloomberg.com/news/real-estate
- Financial Times: https://www.ft.com/property
- CNBC: https://www.cnbc.com/real-estate/
