Will house prices keep rising in 2021? Knight Frank sees some markets softening
Housing prices are continuing to power ahead globally but signs are emerging of softening demand in some markets in the second half of the year, say consultants Knight Frank.
In a second quarter report on global housing, Knight Frank data shows that the pandemic-induced housing boom continues with prices rising by 9.2 percent on average across 55 countries and territories in the year to June 2021.
“Housing markets are undergoing the most unusual of recoveries. An easing of travel rules in some markets, a surge in safe haven purchases by domestic buyers, a flurry of activity ahead of the tapering of stamp duty holidays, and an overall reassessment of lifestyles and commuting patterns, all set against a backdrop of low interest rates,” says Knight Frank.
In total, 18 markets registered double digit price growth, up from 13 last quarter and seven a year ago. Only two markets saw prices decline in the year to June 2021 – India (-0.5 percent) and Spain (-0.9 percent).
In Europe, Slovakia led the way with gains of 18.6 percent, followed by Sweden (17.2 percent) and Luxembourg (17 percent).
Further south, Greece had the strongest performing market, with prices up 3.1 percent in the second quarter, versus 1.7 percent in Italy and 0.9 percent in Cyprus. Turkey leads global annual rankings, with a 29.2 percent rise in house prices but its rate of growth is slowing.
Despite strong price growth there are signs of softening demand in some markets, says Knight Frank. In the US, mortgage applications have dipped and the share of households thinking now is a good time to buy hit a decade low of 28 percent in June.
“Talk of housing bubbles are grabbing headlines worldwide but we expect the prospect of rising interest rates, government intervention and the withdrawal of stimulus measures to rein in the market’s exuberance in the second half of 2021,” it said.
“Expect more cooling measures as policymakers grapple with the affordability conundrum. The Chinese mainland's long debated national property tax now looks more likely,” it added.