Some 74% of key global cities saw house prices increase in the year to March 2016 but there is a widening gap between the strongest and weakest residential markets.
The latest global residential cities index from Knight Frank, which tracks prices across 150 cities, shows that overall values were up by 4.5% year on year.

However, the gap between the strongest and weakest performing housing market has expanded from 55% points in the last quarter of 2015 to 74% in the first quarter of 2016 and the report says that this is largely due to the phenomenal rate of growth recorded in the Chinese city of Shenzhen.

Indeed, this rapidly expanding technology hub, located within 11 miles of Hong Kong, saw annual price growth jump from 48% last quarter to 63% in the year to March 2016 and Chinese cities now account for four of the top five performing cities.

But it also points out that new measures introduced in March in some Tier 1 cities such as Shenzhen and Shanghai are likely to lead to more muted growth during the remainder of 2016. The new rules range from higher down payments for first and second homes as well as longer residency requirements for non-locals wishing to purchase.

Scandinavia is emerging as a key centre of growth. The cities of Stockholm, Gothenburg, Malmo, Oslo and Copenhagen, all recorded annual price growth of between 9% and 17% in the year to March. Low levels of new supply, high demand and cheap finance are fuelling price growth across the region.

The report also points out that prior to the UK’s decision to leave the European Union, London was the UK’s strongest performing city and Europe’s third strongest.

‘The data under analysis covers the period to Q1 2016 but looking to the future, all eyes will now be on the UK’s decision to leave the EU and the impact it has on property markets, not just in the UK but globally,’ said Kate Everett-Allen, head of international residential research at Knight Frank.

‘Future domestic demand will be linked to the direction of interest rates, changes to mortgage rules and employment growth whilst currency shifts will be the key determinant of cross-border investment,’ she added.

Vancouver continues to be North America’s top performer and prices ended the year to March 2016 some 17% higher. Everett-Allen pointed out that a proposal by the city’s Mayor to tax empty homes is under discussion as a means to increase rental supply and address the lack of affordable homes in the city.

The report also shows that despite the recent slowdown in their economies and fall in sales, analysis post-Lehman highlights the extent to which cities in emerging markets such as Rio de Janeiro, Sao Paulo and Bogota still stand out, having recorded price growth  of 236%, 190% and 99% respectively in the eight years since 2008.

House Prices Up by 4.5% in Key Global Cities by Property Wire