Sydney is forecast to see the strongest residential property price growth of any prime world city in 2024 while London will experience a decline, according to Savills.
Capital values for global cities will remain in positive territory in 2024, with prime residential price growth of 0.6 per cent forecast across the 30 global cities monitored by Savills in its Prime Residential World Cities Index. However this is down from the 2.2 per cent growth achieved in 2023.
‘In a year of global economic volatility, residential property has defied expectations and remained resilient, with positive capital value growth seen across many of our World Cities markets in 2023,’ observes Jelena Cvjetkovic, director of Savills Global Residential. ‘In times of uncertainty, real estate is often viewed as a safe store of wealth.
‘The year ahead is the year of elections, adding an additional layer of uncertainty to the outlook. Globally, there are elections taking place in almost 70 countries, accounting for over 40 per cent of the global population and making up over 60 per cent of the world’s economic output. As such, we are expecting lower, but still positive, levels of capital value growth in 2024. Some cities are forecast to outperform, with Sydney and Dubai leading the pack.’
Sydney is seeing high levels of demand for quality prime homes, but supply remains low. An imbalance likely to persist through 2024, pushing up prices in the city, forecast to increase between 8 per cent and 9.9 per cent. Dubai has been a global leader for capital value appreciation in recent years. Prices have increased by 17.4 per cent over the year, notes Savills, but it is likely that this rate of growth will slow over the course of 2024 to around 4 per cent to 5.9 per cent.
At the other end of the spectrum, Hong Kong is set to witness the biggest decline. The city’s ongoing political and economic uncertainty continued to hamper its prime residential markets in 2023. Prime prices in the city fell by -3.7 per cent over 2023, but it remains the most expensive prime residential market in the world at $3,970 per square foot. It is expected to fall by a further 10 per cent or more in 2024.
Singapore (-3.9 per cent to -2 per cent), San Francisco (-3.9 per cent to -2 per cent), and New York (-1.9 per cent to <0 per cent) are also expected to see falls. London is expected to decline by -1.9 per cent to <0 per cent.
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The report adds: ‘Even though prime residential property is less mortgage-reliant than mainstream residential property, weaker macroeconomic conditions will dent sentiment; many potential buyers and sellers will adopt a ‘wait and see’ approach in a higher interest rate environment. A less active sales market will continue to boost prime rental markets, with rental value growth expected to exceed capital value growth once again this year.
‘Demographic changes, urbanisation and the global economic outlook will all continue to have effects on global property markets, changing the type and location of properties desired by buyers and renters.
‘The potential for central bank interest rate cuts during mid to late of 2024 may boost activity across prime property markets and could surprise on the upside for pricing in the latter part of the year.’
