Dubai is a consistent favorite of expats looking for a Western lifestyle without taxes, hence pushing up prices of luxury properties in the emirate
Global house price growth is accelerating as central banks step up campaigns to ease monetary policy.
House prices in the 56 markets tracked by Knight Frank's Global House Price Index rose 3.3 percent in the year through June, according to Liam Bailey, partner and global head of research at real estate brokerage Knight Frank, London. That is below the pre-COVID trend of 4.6 percent, but growth has ticked up since the low reached in second-quarter 2023.
“Global inflation looks increasingly benign and several central banks have indicated they may increase the pace of rate cuts amid weak economic growth,” Mr. Bailey said in his note. “That includes the Bank of England, the European Central Bank and the central banks of Canada and Sweden.”
Values climbed 1.9 percent in the last three months, well above the pre-COVID average of 1.1 percent.
About three-quarters of markets saw house prices climb in the past three months – the highest reading in two years, per Knight Frank data.
Liam Bailey
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Turkey leads Knight Frank’s index with 46.4 percent nominal annual price growth.
However, with the economy undergoing a second round of very high inflation, prices are dropping by around 14 percent annually in real, inflation-adjusted terms.
Poland sits in second place with 18 percent price growth. Strong population growth and the recent “Safe Credit” mortgage subsidy program have helped push prices higher against an ongoing structural undersupply of homes.
The United States market continues to deliver strong growth numbers, up 5.5 percent on an annual basis, per Mr. Bailey.
“Some of this growth is due to falling mortgage rates, but most of it results from strong household formation and limited housing supply,” he said in his note.
“This issue is worsened by the very low long-term rates that existing owners benefit from and the lack of market liquidity this has created across the U.S. Rates need to fall much further before sales volumes begin to normalize.”
Hong Kong is at the bottom of Knight Frank’s table with prices falling by 12.7 percent, although prices were flat over the last quarter, pointing to the potentially successful impact of recent easing of purchase restrictions and stamp duties.
Mainland China is struggling to achieve growth, with prices slipping by 5.2 percent over the past year, according to Knight Frank. This downturn comes despite various support measures from the government.
Bit more aggressive
For weeks, policymakers at the Bank of England have maintained that they are happy to ease monetary policy at a slower rate than peers amid signs of persistent domestic inflation. The outlook pushed sterling to a two-year high against the euro.
Bank of England Governor Andrew Bailey issued a meaningful shift to that narrative in an interview with the Guardian earlier this month.
The Bank of England can become "a bit more aggressive" and "a bit more activist" in its approach to cutting rates, provided the inflation data continues to deliver good news, he said.
These comments will have been carefully planned and markets are now in the process of repricing to account for the new outlook.
The pound sterling posted its biggest one-day slide against the euro since late 2022 last week.
Royal Bank of Canada said it reckons the Bank of England will cut at every meeting until May next year. That would bring the base rate to 3.75 percent.
Retail parks
British Land on last week announced it had raised £300 million to help fund a deal to buy seven retail parks from Brookfield for £441 million. The company has now spent £771m on retail parks since April.
In a trading update, the company said it favors retail parks because they are affordable and easily accessible. The parks now comprise almost a third of the company's portfolio, up from 22 percent just 18 months ago, per Knight Frank.
Chief executive Simon Carter gave an interesting interview to the Financial Times, in which he suggested listed firms were gaining an upper hand when it comes to raising and deploying capital.
Higher debt costs have “levelled the playing field between public markets and private capital, and probably even tilted [it] in favor of the public market,” he said.