Knight Frank property consultant recently reported that global housing markets continue to experience healthy price growth despite interest rate rises since late 2021. Our basket of world cities experienced only one quarterly decline since 2022’s final quarter; after which prices have seen 2.7% increases.

The fundamental drivers behind rising prices remain: limited stock availability, above-inflation wage growth, elevated household savings rates and limited new-build construction projects. Together these factors contribute to maintaining prices at levels which stretch traditional affordability metrics due to rising debt payments.

Turkey once again dominates our rankings, showing impressive annual growth of 102.7% (Ankara) and 776 % (Istanbul). Dubai sits third, while European markets Zagreb and Athens claim two of our five spots.

At the bottom of Knight Frank’s rankings, European markets face more difficult conditions; Stockholm, Bratislava and Frankfurt all saw double digit annual price declines in 2018.

Liam Bailey, Knight Frank’s global head of research noted, “Homeowners can take comfort knowing interest rates appear set to decrease by 2024. While this should provide relief to those transitioning into higher rate mortgage deals during the pandemic years, stabilization levels will likely still be higher than when prices first started increasing again due to affordability challenges.” As prices start rising again the risk of future price declines remains.

What Has Changed? Prices have continued to increase consistently quarter by quarter since 2024 when supports such as mortgage insurance started underpinning pricing; yet many key city markets continue to struggle with stretched affordability issues.

Many prospective homebuyers who lack sufficient deposits and face high mortgage repayments find themselves forced to rent due to lack of savings and payment obligations.

Though prices have seen steady price growth, several pressures will impede sustained housing market recovery, including revival in transactions. Chief among them are higher mortgage servicing costs; although rates should begin easing due to anticipated policy rate cuts in 2024 in the US, Europe, and other regions; their cost remains significantly higher than pre-pandemic levels, exacerbating affordability issues for households transitioning away from previously agreed cheaper deals in recent years – according to Knight Frank.