City of Izmir was the city with the highest rate of average price growth in the year to Q1 21.

House Prices Around The World’s Cities Growing at Fastest Rate Since 2007

House prices in cities are growing at their highest rate since 2007, with 43 of the 150 locations Knight Frank track experiencing an annual price rise of more than 10 per cent.

The three Australian cities of Canberra, Hobart and Darwin all recorded double-digit price growth over the past year and ranked in the top 41 of 150 cities around the world, King Frank head of research Australia Michelle Ciesielski said.

“Australia’s five least populated capital cities led the residential price growth over the past year, and all trended above the elevated average annual price growth across the 150 global cities,” she continued.

“The increase in sales transactions demonstrates the commitment in the migration of people moving towards these smaller cities and regional areas, and many first home buyers have been in a better position to buy given the relative value compared to where they were previously living.

“Those relocating but not purchasing a home in these five smaller cities, has resulted in the rental vacancy falling from an average of 2.4 per cent at the start of the pandemic, to now average a very low 1.2 per cent. In these markets, we estimate the balance between supply and demand to be around 3 per cent, so there is already a significant shortage of stock with very little planned to be built in these cities in the coming years.”

Izmir on Turkey’s Aegean coast enjoyed the top spot, with an eye-watering 33.9 per cent jump in prices in the year to Q1 2021.

The third-largest city in the country, properties in Izmir cost TRY4,911 (A$759.6) per square meter. For comparison, the median valuation per sqm in Australia’s most expensive city Sydney is $1,644, in Hobart, it is $3,026.

Rounding off the top five was Ankara in Turkey (30.3 per cent), Wellington in New Zealand (30.1 per cent), Istanbul in Turkey (28.8 per cent) and Seoul in South Korea for 26.1 per cent.

Prices across the 15 US cities tracked by the index increased by 14 per cent on average in the year to Q1 2021

Some 22 cities are still seeing prices decline year-on-year, with several key cities in India, Spain, Italy and Israel amongst them.

In the short to medium term, three variables may push prices upward, according to the Knight Frank report.

To begin with, there’s the fear of missing out (FOMO)- with borders blocked, investors may try to take advantage of higher prices closer to home.

Second, some purchasers may be eager to lock in lower mortgage rates before they begin to rise, and thirdly, with significant quantities of saved money visible in some markets, a second house may suddenly be within reach for some.

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