Global Housing Markets Display Resilience

Residential activity is recovering quickly in many international markets as Coronavirus lockdowns are eased.

Post-lockdown data from some international property markets is suggesting “a surprising degree of resilience” in house prices, says Knight Frank’s international research chief Kate Everett-Allen.

After two months in lockdown, anti-Covid-19 restrictions are now being eased in countries including France, Greece, Turkey, Australia, Singapore and the UK.

Up-to-date statistics for May have already been published for markets including Hong Kong, Brazil and Iceland – and there’s little sign of a widely-anticipated slump in residential prices, nor a prolonged doldrums for sales activity. In Hong Kong, for example, transaction volumes picked up 45% last month (to 5,984 sales in May), despite a lot of headwinds; in Australia, the average property value dipped by just 0.4% last month.

In the UK, property demand has surged since the market was allowed to re-open two weeks ago, but supply is taking longer to recover. Average prices in Prime Central London fell by 1.4% in May, taking the annual change to -5.1%.

Knight Frank’s weekly sentiment survey of Asian research teams indicates that residential activity continues to pick up across the region. China and Hong Kong are leading the way, although Seoul and Kuala Lumpur are now seeing sales volumes increase for the first time since the crisis. Price rises, however, remain largely confined to Shanghai, Shenzhen and Seoul.

In Australia, a 0.4% decline in average prices in May was the first monthly decline since June 2019 – but still leaves property values 8.3% higher year-on-year.

Data from the US has defied expectations in recent weeks. The number of new home registrations increased by 0.6% in April (a rise that Capital Economics attributes to “relatively affluent buyers, a streamlined selling process and incentives from developers”), and mortgage applications jumped by 37% in May – the largest monthly increase on record.

In the midst of a pandemic, with the US unemployment rate set to rise above 20%, this seems counter-intuitive,” says Everett-Allen. “However, record low mortgage rates, an extended lockdown to reflect on living arrangements and in some US cities, weaker pricing over recent years and the prospect of a discounted purchase may be behind the rise.”

All 18 prime cities monitored by Knight Frank’s research team saw an increase in visits and time spent at places of retail and recreation in the past month.  The highest increases in mobility were recorded in Milan, Paris and Vienna.