At Savills, we’ve been tracking global cities’ prime residential property markets for nearly 20 years. Here we will explain how geopolitical and economic events have impacted the World Cities Prime Residential Index.
WORLD CITies index: A RETROSPECTIVE
Pre-financial crisis HIGH
2006
SWEET TIMES Before the GFC, the world was on a sugar high. Easy access to credit and mortgages meant more money than ever was pumped into the housing market, increasing prices. In 2006-2008, prime capital values increased by an average of 5% every six months across the cities in our index.
Six-month growth
Source: Savills Research
Prime Residential Growth in World Cities, Index Average
Capital value growth
Rental value growth
6 January 2007: First ever iPhone
London saw 59% growth in capital values from December 2005 - June 2007
2007
Singapore had 47% total growth from December 2005 - June 2007
Dubai had a longer run of growth – with capital values increasing 107% from December 2005-June 2008
2008
10 September 2008: Lehman Brothers bankruptcy and GFC
BOOMTOWN December 2005 to June 2007: 59% growth in London
thriving singapore December 2005 to June 2007: Prime capital value growth in Singapore
ENDURING GROWTH December 2005 to June 2008: Long-term growth in Dubai
iPHONE LANDS Apple CEO Steve Jobs announced the iPhone on 6 January 2007
FINANCIAL CRISIS On 10 September 2008 Lehman Brothers files for bankruptcy, leading to the collapse of the sub-prime mortgage market and the global recession
December 2008: North American cities saw average prime price falls of -13%
December 2008: China bucks the trend
the downturn In December 2008, prime prices in the US fell by 13%. This continued until December 2010
asian resilience Asia was not hit as badly as the West. The Chinese government’s stimulus package meant that by 2009 there was double digit growth in Hong Kong, Shenzhen, Shanghai and Beijing – with Hong Kong seeing 37% growth, after a 38% fall the previous six months.
January 20 2009: Barack Obama becomes the first African American US president
2009
A FIRST FOR AMERICA Barack Obama became the 44th president of the United States in January 2009. His two-term tenure saw achievements such as health care reform and economic stimulus.
23 June 2016: Brexit
2009: Global property market rebounds
2016
Exponential growth for Chinese property market
2012-18
2014-2019: political uncertainty hits London property prices
2014-19
8 November 2016: Donald Trump elected US President
BYE BYE EUROPE 51.89% of Brits voted in favour of leaving the EU compared with 48.11% choosing to remain. PM David Cameron stepped down
THE TRUMP YEARS Republican businessman Donald Trump defeated Democratic candidate Hillary Clinton
RALLYING MARKET Many central banks reduced interest rates to restart economies post-GFC – so housing became more affordable for those who could meet stricter lending requirements
STELLAR GROWTH Hangzhou, Hong Kong, Beijing, Shanghai and Shenzhen saw prime residential prices increase by 77% from December 2012 to December 2018
UNCERTAINTY Political turmoil meant property prices in London saw capital value falls in 2014-2019. The sharpest decline of 4.8% came in December 2016, right after a Brexit vote.
2020
MARCH 2020: Covid hits
December 2020: lockdowns ease and demand for property surges
2022-2023: Interest rates increase and renting takes centre stage
2022-23
What’s next? City living continues to thrive
2030?
MARKETS REOPEN Lockdown only caused marginal property price falls (-0.5%), mostly in the West. When markets reopened at the end of 2020 and consumers wanted more space, global property prices grew by 1.4% in December 2020, 3.1% in June 21 and 4.0% in December 21. Some markets even reported supply shortages.
BORROWING COSTS Supply chain pressures and rising inflation lead central banks to dramatically raise interest rates. Property became more expensive and renting became more attractive.
CITY LIFE RULES The UN states that by 2030, 60% of the world’s population will live in cities. Tomorrow’s cities will be sustainable and multi-purpose, and they will open new roads to investors, developers and residents alike.
THE PANDEMIC After more than 118,000 cases in 114 countries and 4,291 deaths, the WHO declared COVID-19 a pandemic on March 11 2020
