Cities back in fashion as London hosts the world

Cities are back in vogue, with the world’s fashion capitals all recording residential property price growth in their mainstream markets in the 12 months to June 2021.

While all eyes are on the capital during London Fashion Week, which starts in earnest today, it is rival New York that saw the strongest price growth amongst the four leading fashion cities – Milan, Paris, London and New York - in the year to June 2021, with average prices up 16.8%, according to the Global Residential Cities Index.

New York’s renaissance comes after a period that saw Americans shift their focus to suburban and commuter belt property markets following the onset of the global pandemic, in a mirror image of the escape to the country trend seen in the UK.

“Nothing keeps New York down for long – not even a global pandemic. We haven’t seen this level of sales activity since 2015 and this year is on course to be one of the strongest on record.” said Jason Mansfield, who looks after residential sales in the United States for Knight Frank.

As in the US, city markets globally are seeing momentum build as buyers return, and average prices increased by 6.3% in London, 4.6% in Paris and 2.6% in Milan in the year to June 2021.

“There’s a lot of positivity in the market at present and city buyers are definitely back. Our London sales are ahead of where they were last year,” said James Clarke, head of London residential sales at Knight Frank. “We’ve seen a lot of buyers both willing and able to spend more on their homes as they look for more amenities and outdoor space to get the best that they can.”

While the ability of international buyers to access the Prime Central London (PCL) market remains curtailed due to Covid travel restrictions, prices are forecast to increase by 7% next year, as pent-up demand is finally released. PCL is expected to outperform all other parts of the UK residential property market from 2020 to 2025 according to Knight Frank’s forecast, with a cumulative average price gain of 25%.

Knight Frank’s Global Buyer Survey 2021 found that amongst those looking to move within the next year cities are back in favour. Globally 38% of prospective buyers are looking at a city location, while 33% are considering the suburbs.

Globally, mainstream house prices are rising at their strongest rate since Q1 2005 according to Knight Frank’s Global House Price Index, with prices up 9.2% on average across 55 countries and territories in the year to June 2021.

Our latest Intelligence Talks podcast takes a closer look at the factors driving the boom in New York's residential property market.

• The Q2 edition of the Global Residential Cities Index, which tracks the mainstream price performance of 150 cities globally, will be published in full later this month.

Image by Pexels from Pixabay