According to a new report by international real estate consultant Knight Frank, despite the global economy's strong performance, increased vigilance on the part of policymakers keen to use macro prudential measures to curb price inflation along with escalating affordability constraints are keeping a lid on urban property price growth, worldwide.
A year ago Knight Frank saw 12 cities exceed 20% growth per annum, this year only one city fell into this category; the Indian city of Surat.
Located on India's west coast, the city has recorded a spike in price growth due to an inordinately low base in Q1 2017, caused by the unprecedented demonetization of high value currency in the country.
Europe's upward trajectory continues. Eleven of the top 20 cities ranked by annual growth are in Europe. Rotterdam (14.8%), Edinburgh (12%), Porto (11.7%) and Sofia (11.3%) now join long-standing frontrunners such as Berlin (14.9%), Budapest (14.4%) and Reykjavik (11.8%).
The index tracks ten Canadian cities and according to the National Bank of Canada, which tracks average prices across each metropolitan area, Vancouver continues to outperform with annual growth of 15.4%. This underlines the divergence with the prime market where prices increased by just 0.2% over the same period.
Seattle (12.9%) continues to lead the 15 US cities tracked by the index, buoyed by a simple lack of demand in the face of escalating demand. Second only to San Francisco as the United States' main technology hub, the city saw US$10.4 billion of real estate investment in 2017.
Knight Frank's Kate Everett-Allen commented, "In the US, despite three rate rises in the year to March 2018 (and a fourth since) average prices across the 15 cities included in our index increased by 6.8% over the 12-month period. The comparable figure for the UK's eight cities is 4.9% with Edinburgh out in front and Aberdeen the weakest performer. "
Southern Europe is increasingly polarized. Whilst Italian cities are well-represented at the foot of the table, Spanish and Portuguese cities are registering stronger growth. Porto, Malaga and Madrid all sit high in the rankings with annual growth of 11.7%, 10.4% and 10.3% respectively.
Knight Frank says that divergent markets are evident not just at a regional level but at a country level as well. The ten countries with the largest gap between their strongest and weakest performing city is synonymous with a list of the world's largest economies; all ten occupy a seat at the G20. India leads the list with a gap of 27 percentage points between Surat (22%) and Delhi (-5%).