Hobart Leads Australia in Global Cities Index

Hobart’s dramatic home price rise has catapulted it into the top 20 of Knight Frank's Global Residential Cities Index, topping all other Australian capitals.

The Tasmanian capital’s 24.6 per cent growth in home prices during the year to June lifted it to 14th place from 23 on the global ranking of 150 cities by annual price change.

Hobart is now behind Wellington’s 24.7 per cent increase.

The Canadian city of Halifax, which returned 30.8 per cent growth, topped the list while other Canadian cities Hamilton and Ottawa also made the top 10 as housing supply levels across the country continue to track at critically low levels.

Sydney surged to 28 from its spot at 55 in March, reflecting the city’s annual rate of growth from 8.6 per cent in the first quarter to 18.7 per cent in the second.

The city’s current median value for dwellings surpassed $1 million in June, and has risen another $16,500 over the month of September.

Melbourne and Brisbane also moved up, from 70th and 89th on the index to 44th and 54th after 13.7 per cent and 11.2 per cent gains respectively.

Top 10 global residential cities index

^{_{^Source: Knight Frank Research, ranked by annual % change (Q2 2020 - Q2 2021)}}

Canberra continued its climb up the global rankings, moving from 17th to 15th position after posting a 23.5 per cent lift in property values.

Two in five of the 150 cities tracked had price rises of 10 per cent or more during the 12-month period.

According to Corelogic’s index, property prices nationally are up 18.4 per cent in the past year, the fastest pace of growth since 1989.

Aside from US cities—including Phoenix, San Diego and Seattle— other high-performing housing markets dominated the rankings in Canada, South Korea, Russia and New Zealand.

New Zealand’s average house price is also closing in on the $1 million mark, with Real Estate Institute data recording a 31 per cent increase over the year to July.

Auckland experienced a price increase of 18.6 per cent over the year to be the 30th fastest-growing global market.

Knight Frank head of international residential Research Kate Everett-Allen said many cities were now outpacing their national housing markets with prices rising by 9.8 per cent on average in the year to June.

Knight Frank global residential cities index: Australian cities

^{_{^Source: Knight Frank Research, ranked by annual % change (Q2 2020 - Q2 2021)}}

“Predictions of ‘the death of the city’ now seem a distant memory,” Everett-Allen said.

“The question now is how long the boom, one largely confined to advanced economies, has to run.

“Our view is that demand will start to wane as pandemic-amassed savings diminish and as monetary policy tightens.

“After 18 months of inertia, governments with heated housing markets are formulating their policy responses, meaning we expect the index rankings to look very different in 12 or even six months.”

But the report, which puts price movements of Australian cities in a global context, also shows the slowdown that has hit other housing markets globally.

In 2016, 15 Chinese cities tracked by Knight Frank’s index averaged 23 per cent growth year-on-year while just two years ago six Chinese mainland cities averaged over 10 per cent growth annually.

Now, only the city of Guangzhou has broken the 10 per cent increase on an annual basis following a series of government measures aimed at cracking down on excessive borrowing in the real estate sector.

As a knock on, the country’s biggest property developer Evergrande is still attempting to untangle more than $400 billion of debt which economists say the potential collapse of which could be the “biggest test that China's financial system has faced in years”.

“The Evergrande debacle has cast a shadow over once surging urban house prices in China,” Everett-Allen said.

“Although the gravity of the situation only emerged in the third quarter there was evidence of a slowdown in price growth in the second quarter and sales activity has continued to slow.”