This unit only points out that some of it is because of more demand from potential customers who are delaying buying homes until interest rates stabilize.
Lisbon (Portugal) saw the highest rental price increase from July to December last year, with an average increase of 22% due to demand outpacing supply, after the government implemented rent control measures.
On the flip side, luxury apartment prices worldwide are growing at their slowest pace since 2019. According to Savills, Hong Kong, New York, and San Francisco are among at least 10 major cities worldwide that have seen luxury home prices decline this year.
More than half of the 30 global cities surveyed by the organization recorded slower annual house price growth in 2024. Luxury home prices have only increased by 0.6% this year, lower than the 2.2% increase in 2023 and the slowest increase since 2019.
High interest rates and political instability in Hong Kong are dragging down home sales and dampening buyer sentiment, potentially leading to a more than 10% decline in home prices this year. Hong Kong is also the market with the deepest price cuts on the list.
According to the representatives of this unit, weakened macroeconomic conditions will affect investor sentiment. Many potential buyers and sellers will sit and watch instead of making transactions.
Markets around the world are caught between rising borrowing costs – which are likely to continue – and a shortage of supply that drives up home prices.
Current uncertainties have slowed down luxury housing markets – including the wealthiest cities globally – in 2023 after a surge in demand following the pandemic.
Along with Hong Kong, luxury home prices have also declined in New York and San Francisco. Meanwhile, New York and San Francisco both suffer from a sluggish office market and San Francisco continues to deal with tech companies’ layoffs.
Home prices in Chinese cities including Shenzhen, Guangzhou, and Hangzhou are also at risk of decline as the government strives to stabilize a highly volatile property market.
According to Savills, easing inflation pressures are boosting prospects for better trading in 2024. The possibility of central banks cutting interest rates this year will push up home prices by the end of 2024.
Sydney and Dubai – both benefiting from an increase in affluent residents – are expected to see price increases of 9.9% and 5.9%, respectively. The Amsterdam and Tokyo markets are also projected to show strong growth. All which contributed to the positive price growth forecast for luxury residential properties in the 30 surveyed cities.
However, according to Savills, the upcoming wave of elections in nearly 70 countries in 2024 may curb home prices in more major cities.
“2024 is the year of elections, which adds another layer of instability to the housing outlook. Therefore, we expect lower but still positive luxury home price growth in 2024,” emphasized a Savills representative.
