8 of the world’s hottest residential markets are in this one country
8 of the world’s hottest residential markets are in this one country
These cities recorded a combined annual average growth of 31.8 percent
The world’s eight best-performing residential markets by house price growth are all in China, according to the latest Global Residential Cities Index by Knight Frank.
The report, which tracks mainstream residential prices on a city-by-city basis, also revealed that Nanjing and Shanghai surpassed the country’s tech hub and Q2 chart topper, Shenzen, to fill the first and second spots, respectively.
“Urbanisation and rising household wealth are behind the surge in Chinese prices but it is far from uniform with smaller cities and rural markets lagging behind,” noted the report’s author, Kate Everett-Allen, who is responsible for International Residential Research at Knight Frank.
She added that the country’s soaring urban house prices have not gone unnoticed by policymakers. Many Chinese cities have seen a tightening of mortgage lending, higher deposit requirements, and in some cases, a ban on non-local buyers.
Elsewhere in the top 10, Vancouver is the only entry outside of Asia, with Chennai taking 10th place. The Canadian city also led Knight Frank’s Prime Global Cities Index with a 31.6 percent increase in prime residential prices in the third quarter.
Here’s a quick look at what is driving rapid growth in each of the top 10 markets:
1. Nanjing
The capital of China’s Jiangsu province saw a 42.9 percent average increase in home values in the third quarter from the same period last year. Nanjing apartment units that went for CNY17,000 per square metre (USD232 per square foot) 12 months ago now go for CNY30,000 (USD409 per square foot).
2. Shanghai
In news that may not surprise onlookers of this perennially hot market, Shanghai home values went to a boil by 39.5 percent in the three months to September from a year ago. The housing market is so fiery in China’s largest city that couples went through sham divorces to get around home purchase restrictions, Everett-Allen noted.
3. Shenzhen
The index’s previous top ranker slid to third place with a 34.5 percent growth in home values. “Since September there is some evidence to suggest the rate of price growth has cooled in a few key cities as the new regulations have taken effect,” Everett-Allen wrote.
4. Beijing
The Chinese capital, which saw a 30.4 percent price growth, was one of the first cities that unleashed a blitzkrieg of cooling measures in October on home buyers. In spite of the Beijing government’s slew of surprise curbs, real estate investment in China grew by a record 13.4 percent that month from a year earlier.
5. Wuxi
This manufacturing powerhouse, located by Lake Taihu, saw home prices soar by 28.2 percent in the third quarter. It was one of several cities that slapped surprise cooling measures on home buyers in early October.
More: What impact might China’s capital controls have on global property?
6. Hangzhou
Hangzhou’s profile rose dramatically when it hosted the G20 Summit this year. With that rise in prominence came an increase in residential real estate values — up 28.2 percent in the third quarter from a year ago, according to the Knight Frank report.
7. Tianjin
In Knight Frank’s previous Global Residential Cities ranking, there were six Chinese cities in the top 10. Now they occupy the top eight rankings. Coming in at number seven as the hottest home market in the world is Tianjin, a port city in northeastern China. Tianjin house prices increased a whopping 25.4 percent in the third quarter.
8. Zhengzhou
The capital city of Henan Province in the east-central mainland registered a spry growth of 25 percent in the third quarter from the same quarter in 2015. Together, the Chinese cities occupying the index’s top eight notches posted an average annual growth of 31.8 percent.
9. Vancouver
With a price increase of 24 percent in third-quarter home values from over a year ago, Vancouver is without a doubt the hottest city in the world that isn’t in China or India. Most remarkably, the Canadian metropolis slipped to ninth place after it ranked fifth in the second quarter. “This shift is not as a result of slowing prices, annual growth is much the same as in June, close to 24 percent, but [it’s] due to the phenomenal ascent of the Chinese cities which have supplanted it,” stated Everett-Allen.
10. Chennai
India’s hottest market is also the world’s tenth hottest. Like Vancouver, the Tamil Nadu state capital posted a 24 percent price growth. However, the Indian city could tumble down the index as the effect of Prime Minister Narendra Modi’s demonization drive continues to manifest itself in the cash-driven realty market. Luxury Chennai condominiums are poised for price markdowns as hefty as 10 to 25 percent.
Read next: 5 trends that could affect Asia-Pacific real estate in 2017
Source: Property Report