Cape Town has come out as the fifth-best performing city (with 68%) in the last five years in Knight Frank's Global Residential Cities Index report that tracks mainstream residential prices across 150 cities worldwide.
The report also showed that Budapest (24.2%) has been usurped by the Chinese city of Xi’an (25.1%) this quarter as the city with the highest rate of annual growth.
Overall, the index continues to track lower recording average growth of just 3.5% in the year to June 2019, down from a high of 6.7% at the end of 2016.
Rising economic uncertainty, trade tensions, political crises and affordability concerns are leading to weaker sentiment in mainstream housing markets.
In Europe, Porto (13.6%), Zagreb (11.4%) and Athens (11.2%) join Budapest in the top ten. Rising from a low base, prices in all three cities still sit below their pre-financial crisis peak.
Dutch and Spanish, along with Latin American capitals, also rank highly.
Of note is the widening gap between cities in the same country – this includes Wellington (9.1%) and Auckland (-2.9%), Ottawa (6.3%) and Vancouver (-4.9%), Lyon (9.2%) and Marseille (0.3%) as well as Phoenix (5.8%) and Seattle (-1.3%).
Local economic fortunes, opposing market cycles and in some cases, tighter property market regulations are behind this divergence.
A number of tier one cities find themselves in the bottom third of the index rankings this quarter, including London, New York, Auckland, Rome, Dubai and Sydney.
In a number of these cities, the prime sector continues to outperform the mainstream market, whilst in others, analysis of price movements in the last quarter suggest their rate of decline is starting to slow.
A brief look at price movements over the last five years presents a diverse mix of cities.
However, aside from the Dutch cities which are recovering following a sharp downturn in 2012, the remaining markets are rising from a low base and in several cases, a dearth of supply in recent years has put pressure on prices as demand has strengthened.
The key findings from the report :
- Xi’an is the city with the highest rate of annual growth in Q2 2019 (25%)
- 3.5% is the average annual price growth across 150 cities
- 80% of the cities analysed saw price rises in the year to Q2 2019
- 5.9% average annual price growth across cities in emerging markets
- 2.0% average annual price growth across cities in developed markets
- Cape Town has come out as the fifth best performing city (with 68%) in the last five years.