Darwin, Canberra and Hobart house prices are rising at the fastest rate since 2007, says Knight Frank Global.
Out of the 150 cities Knight Frank tracks as a part of the Global House Index, 43 cities are registering annual price growth above 10 per cent.
Knight Frank Head of Residential Research Australia Michelle Ciesielski revealed Darwin (10.8 per cent), Canberra (15.7 per cent) and Hobart (13.8 per cent) all saw record-breaking annual rises.
“Australia’s 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,” Ms Ciesielski said.
Adelaide saw a 12-month rise of 9.8 per cent, Sydney (8.6 per cent), Melbourne (6.4 per cent) and Brisbane (5 per cent) saw also saw notable increases.
“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,” Ms Ciesielski explained.
“Those relocating but not purchasing a home 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.”
New Zealand’s Wellington (30.1 per cent), Auckland (19.6 per cent) and Hamilton (20.9 per cent) also saw unprecedented change.
Turkey’s Izmir (33.9 per cent), Ankara (30.3 per cent) and Istanbul (28.8 per cent) saw the highest global increases, coming in first, second and fourth respectively.
Wellington broke the Turkish trend, coming in third place. South Korea’s capital Seoul came fifth.
Halifax in Canada came sixth, while Russia’s Moscow and St Petersburg came seventh and eighth.
New Zealand squeezed into the top 10 yet again, with Hamilton coming ninth while Phoenix in the US came 10th, just pushing Auckland out of the running (11th).
Canberra was Australia’s highest ranking city in 17th place.
Three factors may push prices higher in the short and medium term, Knight Frank notes. With borders closed, investors may look closer to home to take advantage of rising prices.
Some buyers may also be keen to lock in to lower mortgage rates before interest rates start to shift higher and finally, with large sums of accrued savings evident in some markets, a second home may now be within reach for some.
There are, however, already signs that some markets are starting to cool. Canada has reported two straight months of moderating sales and Capital Economics reports that mortgage applications for US home purchases have fallen back to their pre-COVID levels, suggesting the distorting effect of the pandemic may be diminishing.
And despite the gains in many capitals, it’s not a global boom. Twenty-two cities are still seeing prices decline year-on-year with several key cities in India, Spain, Italy and Israel amongst them.
Dubai saw the most significant decline at 4.4 per cent.