_Hobart top Australian performer on Global Residential Price Index

The index tracks the movement in mainstream residential prices across 150 cities worldwide using official statistics.

Overall the Knight Frank Global Residential Cities Index increased by 3.4% in the 12 months to the end of June, with the annual rate of growth declining marginally from 3.6% in March.

Hobart came in at number 13 on the global list of 150 cities ranked by annual price growth from Q2 2019 to Q2 2020, with growth of 10.8%, while Sydney was ranked 20 (9.4% growth), followed by Melbourne at 37 (6.8%) and Canberra at 39 (6.7%) with all four cities recording growth of around double the average or more.

Adelaide was next at 95 (2.2%), followed by Brisbane at 116 (0.5%), Perth at 131 (-1.2%), and Darwin at 144 (-5.1%).

Knight Frank’s Head of Residential Research, Michelle Ciesielski said of the 150 cities tracked, 81% still saw a price increase over the year to June 2020.

She said it was not surprising that the annual rate of residential price growth around the world had moderated given most housing markets were impacted by the COVID-19 pandemic in the second quarter, with many transactions unable to be completed.

“Despite this, the Knight Frank Prime Residential Cities Index is still recording growth on par with that seen in 2018 and 2019,” she said.

“In Australia six of the eight cities included in the index recorded growth, with four recording growth of around double or more the average annual global growth rate.

 “The volume of residential sales in Australia has reduced by close to 34 per cent during COVID-19, but in saying that, there has only been a shallow number of listings on the market with little evidence of distressed sales.

“Price growth has been impacted across Australia, but dwelling values only fell by two per cent in the second quarter of 2020, faring much better at this point than first anticipated.

“In the short term we expect further falls in housing prices to be cushioned by the ongoing low number of listings and a decreased number of new properties due for completion, with the proposed relaxation of responsible lending in early 2021 to shield against economic headwinds.

“We anticipate there will be a lot of change in the global index going forward, depending on sentiment around the world, and if we see second surges of the pandemic, which could also impact demand and price growth.”

Knight Frank’s Head of Residential in Australia Shayne Harris said Hobart has recorded the highest price growth in Australia for several reasons – the relative value and lifestyle continues to be appealing with those from the mainland, and this was amplified during COVID-19 with the rapid response to isolate the state, leading to fewer lockdown restrictions for locals.

“Tasmania has seen increased popularity by those seeking a regional tree-change, especially now when we have officially seen the success in the adaptability of many white-collar workers working from their homes.

“Sydney continues to be underpinned by a severe shortage of stock for sale by both auction and private treaty and this has been reflected by the high clearance rates recorded.

“In the past couple of months difficulties around obtaining finance has drawn out many Sydney sale transactions and this still remains a hurdle, but in the past few weeks, I’ve been taken back with the increasing number of registered bidders at auctions.

“In some instances, we are once again seeing first home buyers being outpriced by downsizers and this is most likely to continue given their lower reliance on steady employment and a reasonable performing stock market.”

Turkish cities now occupy the top three rankings for Knight Frank’s Prime Residential Cities Index, due to the fundamentals of strong demand and constrained supply in the country, along with a weakening Lira.

Izmir recorded the highest rate of annual growth (28.1%) in the year to June 2020, followed by Ankara (26.4%) and Istanbul (20.2%), with the top growth performer globally for Q1 2020, Manila, being pushed back to the fourth ranking, with growth of 18.3%.

European cities now account for two of the top 10 rankings, down from four one year ago, with Luxembourg the strongest performer, up 14%.

Australian cities – ranked by annual growth rate (%) in Q2 2020