2Q 2019 Prime Housing Results: Berlin and Beyond
For the second half of 2018 the prime residential markets in the worlds key markets saw a decrease in activity that spilled over into 2019 with the Savills Prime Residential Index increasing by 0.4% in the 1Q of 2019. This has the 2019 year growth rate at 0.7% when compared to June 2018 when the growth was at 5.1%.
Two cities that have the best growth within the past year have been Berlin and Paris. Each of these prime residential markets have seen growth increase by 8% each. Keeping the price growth active has been a low supply of residential stock and increased demand from international investors and domestic buyers.
For the 1H of 2019 trends in the China market had residential prices increase after declines in the 2H of 2018 with help from less restrictive housing restrictions and a slowing economy.
The city of Moscow has seen residential prime prices climb 1.2% for the 1H of 2019 after years of declines.
For Malaysia's Kuala Lumpur and Bangkok prime residential markets saw price growth at 2.5% for the 1H of 2019 as a result of international buying.
Other cities with capital value growth include Hangzhou at 2.2%, Hong Kong at 1.3% and Tokyo at 0.9%.
For negative capital value other major cities came in with negative results for the the past six months:
Los Angeles at -1.0%, London -1.0%, Cape Town -1.2%, New York -1.8%, Dubai -1.9% and Sydney -2.3%.
Most of the demand for cities in the United States for the 1H of 2019 is the effect of new tax changes that cap the amount of deductions for state and local taxes.
As Savills reports:
'...mortgage interest deduction was reduced from US$1million to US$750,000 in mortgage debt. Additionally, in the case of New York and Miami, there are high levels of new build supply in the prime residential sector.'
For the London prime residential market the politics of Brexit is still weighing in on the local market , Savills reports:
'The impact of Brexit is still being felt in London, although the market is showing signs of levelling out as prices recorded their smallest fall since June 2014 as a shortage of stock in some markets is helping fuel demand.'
Savills outlook for Sydney:
'The opposite is true in Sydney, as price falls accelerate following a change in mortgage regulations and increased taxes and restriction for international buyers.'
As a result of global uncertainty, government policies, increased supply of property stock lack of available land in cities for new construction and the cost of money have contributed to a international slowdown.
Savills forecasts include:
'It is expected that high net worth individuals will continue to want to hold one or more world city prime residential properties as part of their portfolio, both as a store of wealth and as a base for work and leisure.'
'Over the short term, we expect European cities to continue to outperform as they benefit from Brexit and comparatively lower prices. Over the longer term, wealth generation will be critical to the growth of each city’s prime residential market, along with political and economic stability and favourable demographics.'