Chinese top tier cities dominate urban house price growth

PETALING JAYA (Dec 22): House prices in China’s top tier cities have recorded an average annual growth of 31.8%, occupying the top eight spots of Knight Frank’s Global Residential Cities Index, said international real estate firm Knight Frank LLP.

In its index results report for 3Q2016, Knight Frank said Nanjing and Shanghai have overtaken 2Q2016’s top performer, the rapid-growing technology hub of Shenzhen (35%), growing 43% and 40% respectively.

“Urbanisation and rising household wealth are behind the surge in Chinese prices but it is far from uniform, with smaller cities and rural markets lagging behind.

“[However,] China’s rapidly-rising urban house prices have not escaped the attention of policymakers with many cities seeing the tightening of mortgage lending, higher deposit requirements, and in some cases, a ban on non-local buyers,” noted Knight Frank.

The report added that home purchase restrictions imposed even prompted couples to divorce just to buy more properties.

Beyond China, Asia-Pacific’s main headline was Wellington’s outperformance of recording an annual price growth of 17%, overtaking Auckland (15%) as New Zealand’s hottest housing market, a title the latter had held for eight years.

Although its annual growth is much the same as in June — close to 24% — Vancouver dropped from fifth to ninth position in the third quarter, due to the phenomenal ascent of the Chinese cities, said Knight Frank.

Back home in Kuala Lumpur, the annual house price growth for the city stood at 5.1%.

Over in Europe, Budapest, Oslo and Bristol are the region’s strongest performers, growing 24%, 18% and 16% respectively, albeit for differing reasons.

“Budapest represents good value compared with other European capital cities; Oslo is experiencing high demand and low supply; while Bristol’s boom is fuelled by low mortgage rates and a structural undersupply of housing,” said the report.

“[Overall,] house prices increased in 77% of the 150 cities tracked by the index annually. Thirteen cities recorded price rises in excess of 20% in the year to September,” said Knight Frank’s international residential research Kate Everett-Allen.

Of the 33 cities that saw prices fall in the year to September, 20 were in Europe, with cities in Canada and Australia also well represented.

Darwin, Moscow and Aberdeen are at the foot of the rankings, due to an upturn in new supply in Darwin while for Moscow and Aberdeen, falling oil prices in recent years have impacted the local economy.