Australia is the 13th strongest property market in the world

The latest Knight Frank Global Residential cities index shows that Brisbane came in 10th position with property prices growing 28.4 per cent in nominal terms over the past 12 months to March 2022.

Hobart was the next best-performing capital city market in Australia with 26 per cent growth, followed by Adelaide where prices jumped 25.1 per cent.

Darwin was 23rd (19.9 per cent), Canberra came in at 26 (18.4 per cent), followed by Sydney at 31 (16.1 per cent), and Melbourne at 66 (9.2 per cent).

Istanbul was the leading city internationally for price growth, according to Knight Frank, with a 122 per cent increase in 12 months, followed by Ankara (111.7 per cent) and Izmar (105.9 per cent).

Turkey leads the index with nominal price growth, breaking into the rarefied three-digit threshold (110 per cent) but subtract its consumer price inflation of 69.9 per cent and the real figure deflates to 30 per cent.

Overall, Australia stacked up well compared to the rest of the world, registering 18.3 per cent average annual growth across the major capital cities.

According to Knight Frank, Australia’s property market grew by 15.8 per cent in nominal terms, but when adjusted for inflation, that figure falls back to 10.1 per cent, putting it at number 13 on the list.

Report author and Partner Residential Research at Knight Frank, Kate Everett-Allen, said while the past 12 months have seen strong property price appreciation, a hawkish turn from central banks will likely see growth slow.

“(For) economies whose monetary tightening cycle lags that of New Zealand, Auckland’s path may be one to watch,” Ms Everett-Allen said.

“Price growth in Auckland sits at 5.1 per cent down from 22.7 per cent a year ago. 

“The country’s five interest rate rises since October 2021 has influenced buyer sentiment with residential sales falling 40 per cent from 4013 in Q1 2021 to 2403 in Q1 2022.”

Ms Everett-Allen said the market cycle is shifting as large parts of the world move from a pandemic to post-pandemic landscape. 

“Inflationary pressures are surging, and the cost of debt is increasing as interest rates track higher,” she said.

“Set against this backdrop of heightened uncertainty, rising taxes and more property market regulations (e.g. a ban on foreign buyers in Canada), we expect the rate of price growth to slow in most markets but we think a sudden shift to negative price growth is unlikely for most cities in 2022.

“Along with key fundamentals such as economic growth, supply levels and employment, the speed and scale by which interest rates rise will determine the extent of the slowdown in price growth over the coming year.”

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Rowan Crosby

Rowan Crosby is a freelance journalist specialising in finance and real estate.