Further price falls forecast in some mature, global city hubs

World Cities saw a surge in activity in the wake of the pandemic, as borders reopened and demand for city living returned, but growth slowed as the economic rebound ebbed away and many markets have struggled in the choppier waters of the current fiscal and monetary situations.

Suffering from weaker sentiment associated with higher interest rates and the challenging economic backdrop, the prime residential markets of Los Angeles, New York, San Francisco, Seoul, London, Singapore, and Hong Kong are all forecast to decline this year. Chinese locations Guangzhou, Hangzhou, and Shenzhen are forecast to see price falls over 2024, as the property market volatility and restrictive government policy to try to stabilise the market take effect in these cities.

Ongoing tech industry dispersion to lower-cost cities across the United States and persistently lower levels of office attendance will compound macroeconomic factors for San Francisco (-3.9% to -2%) and New York (-1.9% to <0%) for 2024, while Seoul and London will see falls, they will be more modest than those expected in their mainstream markets due to a shortage of prime supply.

Price points take priority

Markets with comparatively lower price points relative to other world cities look likely to perform well over the coming year. Cape Town, Barcelona, Madrid, and Kuala Lumpur each boast prices per square foot below $800, and comprise the next four forecast highest growth markets.

Spanish cities Madrid and Barcelona have seen an influx of buyers from Latin America and the United States in recent years while also seeing lower levels of supply. This imbalance between supply and demand will likely continue to push prices up, with both cities predicting growth of between 2% to 3.9% for 2024. This will build on already robust price growth seen by Madrid and Barcelona over the course of 2023, with capital value increases of 4% and 3.4%, respectively.

Challenges in China

Continuing uncertainty around developer prospects, low levels of consumer sentiment, and low levels of supply which plagued the Chinese property markets in 2023, are likely to persist in 2024. Guangzhou, Hangzhou, and Shenzhen are anticipating slight price declines of -1.9% to <0%, while Beijing and Shanghai are anticipating flat growth for the year.

A muted domestic economy and a weaker mainland China will have an impact on Hong Kong’s prime residential market, with price falls more than -10% expected. With 2023 seeing low levels of market sentiment and the trend expected to continue through 2024, it’s likely that the market will see further price falls and more distressed sales. Despite this, the market will remain the world’s most expensive city for prime residential prices on a per-square-foot basis.

Sydney and Dubai to see strongest forecast growth in 2024

Lifestyle leads for our two forecast top performers for the coming year. Both cities will continue to benefit from increases in their high-net-worth populations. Sydney is seeing high levels of demand for quality prime homes, but supply remains low. An imbalance likely to persist through 2024, pushing up prices in the city, forecast to increase between 8% and 9.9%. Dubai has been a global leader for capital value appreciation in recent years. Prices have increased by 17.4% over the year; however, it is likely that this rate of growth will slow over the course of 2024 to around 4% to 5.9% as we see a return to a more 'normal market'.

_{Read the other articles within Savills Prime Residential Index: World Cities below}