60% of the thirty cities analysed in the Savills Prime Residential World Cities index have seen positive capital growth reflecting a level of relative confidence in the asset class. While seven cities reported price falls of less than -1%, the strong fundamentals of these local prime residential markets may support the possibility for capital value appreciation in the second half of the year for these locations. However, wider levels of caution remain among some buyers as they await clarity on interest rates.

Year to date, cities in Southern Europe and the Middle East have seen the strongest capital value growth over the first six months of 2024; Lisbon leads with a rise of 4.2% for the first half of the year. Amsterdam, Madrid, and Athens have each seen capital value increases above 3% and Dubai rounds out the top five with growth of 2.9% for the first six months of the year.

Across the EMEA region, only two of the 13 markets saw negative capital value growth for the first half of the year. Berlin and London have seen slight price falls of -0.8% and -0.1% respectively. In Berlin, an increase in the supply of prime properties in some districts without a corresponding rise in demand has led to downward pressure on prices.

In many locations across Europe, particularly southern Europe, where undersupply is driving prime residential price increases, American buyers have become a key prospective buyer base, thanks to a comparatively strong dollar and a growing interest in the lifestyle on offer.  

In the US, persistently high interest rates have brought the housing market to a crawl; the prevalence of the 30-year-fixed interest rate mortgage means that few are willing to enter the housing market particularly if their current mortgage is fixed to a low rate. As a result, prime residential prices have fallen in three of the four US cities monitored, with only San Francisco seeing positive capital value growth of 0.7% for the first half of the year.

Asia Pacific markets have seen a more varied performance, creating a tale of two (groups of) cities. Bangkok, Sydney, and Mumbai have each seen growth of more than 2.5% in the first six months of 2024; due to high levels of demand coupled with limited supply. Tokyo has also reported price growth of 1.6%.

Chinese prime residential markets are continuing to see the impact of government measures to support the housing markets, but overall this has done little to move the dial on buyer confidence. Transactions across the five markets remained down during the first half of the year, with only Shanghai seeing positive capital value growth of 0.1% over the period. In Hong Kong, the withdrawal of cooling measures boosted mainstream sales, but prime sales remain depressed given high interest rates, which are linked to US Federal Reserve interest rates, and lower numbers of mainland Chinese buyers. As a result, prime capital values fell by -1.1% over the first half of the year. 

“Looking ahead, we predict an average capital value growth of 0.5% for the second half of the year, which would bring total 2024 growth to 1.3%”, comments Kelcie Sellers, associate director, Savills World Research. “The ongoing supply-demand mismatch for high end residential product is projected to fuel price growth in European cities such as Amsterdam, Lisbon, and Barcelona, where 2% to 3.9% is forecast in the second half of 2024.”