Of all the classics, Sense and Sensibility, the 1881 novel written by Jane Austen, probably best describes the recent performance of the global prime residential market – price growth across the 30 markets Savills monitors remained positive in the first half of 2024, with values rising by an average of 0.8%, led by the performance of European and Middle Eastern cities.

For many European locations, undersupplied markets have driven prime residential price increases. Across the EMEA region, only two of the 13 markets found themselves East of Eden, to misappropriate the words of John Steinbeck. Berlin and London were the only such cities to see prices fall, with values easing back modestly by -0.8% and -0.1%, respectively.

Though prices have fallen marginally in London, demand from domestic and other international purchasers has been supported by growing stability in the mortgage market. However, questions remain about the status of "non-doms" in the Brave New World of the Labour government (Aldous Huxley’s 1930s vision of a futuristic world state).

Italy, one possible destination for such "non-doms", has recently announced that it is doubling its flat tax to €200,000 on overseas income for The Outsiders (in this case – and with apologies to the author S.E Hinton – new tax residents). The policy, popular with global high net worth individuals, has fuelled an uptick in demand in business hubs, such as Milan, which has seen prime residential price growth of 1.6% in the last year.

London is also seeing increasing numbers of cash-buyers who are able to avoid high interest rates, through opting out of using a mortgage to finance their purchase altogether. This trend is also seen across the North and South (Elizabeth Gaskell, 1854) of the US, where 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, even in the prime market. As a result, prime residential prices have fallen in three of the four US cities, with only San Francisco seeing positive capital value Metamorphosis (Franz Kafka, 1915) of 0.7% for the first half of the year.

Asia Pacific markets have seen a more varied performance over the first half of the year, 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; each market has seen elevated levels of demand in their prime submarkets, coupled with limited supply, supporting this pricing.

Chinese prime residential markets are continuing to see the impact of government measures to support the housing market, but overall, this has done little to move the dial on buyer confidence and Hard Times remain for the near term (albeit somewhat less severe than portrayed by the pen of Charles Dickens in the mid-19th century.) Of the five cities, only Shanghai saw positive capital value growth of 0.1% year to date. 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.

For the second half of the year, there are Great Expectations; we predict an average capital value growth of 0.5%, which would bring total 2024 growth to 1.3%. Cape Town is forecast to see the highest growth for the remainder of 2024, with capital value increases forecast to reach the Wuthering Heights of +4.0% to 5.9%. The more positive political and economic outlook, combined with the prospect of interest rate relief later in the year, bodes well for a recovery in the local housing market.

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