Durban (pictured), ranked 14th out of 165 of the world’s key urban residential markets according to Knight Frank’s new Global Residential Cities Index. The index tracks mainstream residential prices globally on a city rather than country basis.
Cape Town, ranked 33rd and Johannesburg, ranked 52nd, with house price growth of 8.6% and 6% respectively, were some way off Durban’s 11.6% in an index which saw house prices either rise or remain flat in 2015. The fourth quarter results, based on official house price data for mainstream residential markets, saw the index increase by 4.4% in 2015.
Pick of the bunch
The Chinese city of Shenzhen leads the rankings with price growth of 47.5% recorded in 2015. More than 22 percentage points separates Shenzhen from the index’s second ranking city: Auckland (up by 25.4%).
According to Kate Everett-Allen of Knight Frank International Residential Research, who analysed the index’s inaugural set of results, first-tier cities in China last year saw strong demand on the back of the relaxation of policy restrictions which boosted market performance. Shenzhen is fast becoming one of China’s key technology hubs – its population of 10m has an average age of 30.
China, she also found, has the largest disparity among its cities with 50 percentage points separating its strongest and weakest performing city housing market.
Strongest world capital
Budapest, where prices increased by 16.3% in 2015, is the strongest-performing capital city within the index. The city’s comparative value, combined with an exclusive investment immigration bond programme for Chinese nationals, has fuelled demand.
Of the 20 US cities included in the index, Portland (11.4%) and San Francisco (10.4%) were the strongest performers with Washington DC the weakest (1.7%).
Although none of the US cities saw prices decline, no single city could compete with Canada’s Vancouver which proved North America’s top performer, with prices rising 11.9% on an annual basis.
Bringing up the rear
The Indian city of Chandigarh occupies the bottom ranking this quarter, where prices fell by 7.7% year-on-year. Despite cutting interest rates four times in 2015, India’s base rate still stands at 6.75% and the economy has faltered, impacting on household income.
Of the 43 cities which saw house prices decline in 2015, 20 were located in Europe, with the southern European economies well represented. Cities in Greece, Italy and Cyprus occupy four of the bottom five rankings.
Urban and rural housing markets are increasingly polarised when it comes to price performance, Everett-Allen notes. According to the World Bank, 54% of the world’s population currently lives in cities, and by 2045 the urban population will rise by another 2bn to 6bn, suggesting the pressure on urban prices looks set to intensify.