Seoul surges to the top of Knight Frank's Prime Global Cities Index
Making sense of the latest trends in property and economics from around the globe
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Last year, almost 3 million people applied to bid for a single apartment in the satellite town of Hwaseong, just outside Seoul, South Korea.
That incredible nugget came from a September FT interview with Rhee Chang-yong, governor of the Bank of Korea. Governor Rhee is struggling to control runaway house prices and went as far as to suggest capping university admissions from some of Seoul's priciest neighourhoods. Buyers flock to Gangnam and similar areas in order to access a few elite institutions.
His struggle continues: Seoul topped Knight Frank's Prime Global Cities Index during 2024. Luxury house prices in the city climbed 18.4% during the year, beating Manila and Dubai to the top spot, according to the data released today. Tokyo came in fourth after rebounding dramatically during Q4 as the weakened Yen attracted overseas buyers. The quarter's 10.6% growth came despite the central bank hiking interest rates to their highest level in 17 years.
Wait and see
Growth across our index is improving slowly.
The current 3.2% annual growth rate is an improvement on the previous quarter but sits below the 20-year long run average of 5.3%. Two-thirds of cities recorded positive annual growth and fewer than 20% experienced declines.
It's been a volatile five-year period in prime global housing markets, particularly in North America, where pandemic-era surges gave way to slowing growth as interest rates climbed. As 2024 ended, we saw a convergence across all four global regions, with growth rates clustering closer to the basket average.
What happens next depends largely on whether expected falls in interest rates come to pass. The likelihood that the US and China's tit-for-tat exchange of tariffs morphs into a full blown trade war has added a significant dose of uncertainty. Officials at the Federal Reserve opted to hold rates steady last week. Central banks that have so far acted aggressively to cut rates, like Sweden's Riksbank, are pivoting to 'wait-and-see' strategies.
A material shift
The Bank of England is unlikely to follow suit when it publishes its latest decision tomorrow.
Business sentiment is poor. Last week's Lloyds survey showed confidence ebbing away, weak hiring plans and a decline in the share of firms planning to increase prices. S&P Global's manufacturing PMI, out earlier this week, showed activity contracted for the fourth consecutive month in January. New orders and employment also fell.
That will be enough to prompt a majority of MPC members to vote to cut the base rate to 4.5%, consensus suggests. Whether that will have any knock on effect to mortgage rates remains unclear - this cut is already priced into swap rates, though new economic forecasts published alongside the decision could include a material shift in the outlook.
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