Hong Kong, New York: High-end housing prices to slump

Savills’ global prime rent values rose by 5.1 per cent between 2023 and 2024, outpacing the capital values of most cities. Partly this was due to increased demand from prospective purchasers who were delaying purchases while interest rates were stabilised.

Lisbon’s rental market grew the most between July-December last year. The average increase was 22 per cent, due to a demand that outpaced supply. This followed the introduction and enforcement of rent controls.

Hong Kong New York San Francisco and at least twelve other major cities are facing a decrease in residential real estate values this year.

Bloomberg’s report shows that in 2024 residential capital value growth will be slower in more than half (50%) of the 30 cities Savills monitors. Overall, the firm believes that growth in the prices of high-end properties will slow this year to 0.6 % from 2.2 % in 2023. That is the lowest gain in years.

Sydney and Dubai – both benefiting by an increase in their population of high-networth individuals – are expected to see prices rise as much as 9,9 percent and 5,9 percent, respectively. Amsterdam and Tokyo have also been predicted to grow, helping to boost the capital value forecast across all 30 of the cities.

Savills warns that an upcoming wave of parliamentary elections, which will take place across 70 countries, in 2024, may limit the values in even more large cities.

Elections will be held in 2019, adding further uncertainty to the forecast. As a result, we anticipate lower but positive capital value growth levels in 2024.

Hong Kong’s high interest rates, coupled with political uncertainty, are likely to drive down prices of prime residential properties by 10 percent or more this year.

The world’s markets are stuck between sharply high borrowing costs which will probably stay that way, and a shortage in housing stock which keeps prices at a high level.

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In 2023, after the post-pandemic spike in demand for homes in prime residential areas (which cover the most affluent cities in the world), the growth of these markets was muted.

New York and San Francisco also show weakness. The former is experiencing a muted comeback to offices, and the latter is still dealing with tech-related turmoil.

Chinese cities Shenzhen Guangzhou Hangzhou could also be on the decline, as the Government struggles to stabilize the country’s volatile housing market.

Despite this, the prospects for buyers of homes in 2024 are improving due to a easing in inflationary conditions. Savills noted that the potential for central banks this year to cut interest rate could lead to a surprise in pricing at the end of the year.

Although prime residential is not as mortgage-resistant as mainstream residential property, a weaker macroeconomic condition will dampen the mood. Many potential buyers or sellers will adopt an “await and see” approach.

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