_Budapest bucks the trend for slower growth

Although the great moderation continues, a number of European and Asian cities performed strongly in 2018.

Kate Everett-Allen April 08, 2019

Budapest leads the Global Residential Cities Index, which tracks the movement in average residential prices across 150 cities, registering price growth of 23% in 2018. The Hungarian capital has been placed within our top ten for the last five consecutive quarters.

Overall however, the slowdown continues. Some 79% of countries saw prices increase in 2018, down from 87% in 2017 and the index grew by 4.3% in 2018, down from 4.5% last quarter.

The top ten this quarter is comprised entirely of Asian and European cities including three Dutch cities – Rotterdam (16%), Amsterdam (13%) and Utrecht (12%).

The Portuguese city of Porto sits in fourth place recording 16% growth as prices rise from a low base and the city’s tourism profile expands.

Spain’s recovery continues with Malaga, Madrid, Barcelona and Valencia all recording annual growth above 5%. Despite a weaker growth forecast for the Eurozone, Spain’s unemployment and household debt continues to drift lower and supply remains low by historic standards.

France and Australia are displaying a similar trend; in each country there is one city that leads by a significant margin. Lyon and Hobart (both 10%) sit 43 and 83 places respectively ahead of their next compatriot city.

Phoenix (8%) and Atlanta (6%) now lead the US cities as Seattle (5%) has slid to 61st in the rankings.

In Asia, Hong Kong has lost ground, falling 36 rankings over a three-month period to 43rd place. A 14% fall by the Hang Seng Index in 2018, uncertainty surrounding government housing initiatives and a rate rise in September 2018 stifled demand.

"Latin America’s key cities are rising up the rankings; Bogotá, Santiago, Mexico City and Lima saw growth above 6%, a marked difference to a year ago when three of the four registered annual growth below 3%. "

Major world cities including London, Dubai, Sydney, Moscow, Auckland and Geneva all saw mainstream prices decline in 2018 but by comparison in a number of cases, the prime segment edged higher.

With geopolitical issues clouding the world stage, and the era of cheap finance coming to a close, we expect the index’s performance to weaken further in 2019, although the Federal Reserve’s decision to halt rate rises in 2019 may soften the blow for a number of emerging markets.

See the full index here

For further information please contact Kate Everett-Allen