Following on from the publication of the latest Global House Price Index, the launch of the first edition of Knight Frank’s Global Residential Cities Index, which examines mainstream residential property prices on a city rather than a country basis, has provided some interesting insights into how Dublin’s residential market compares at a European and Global level.
The Global Residential Cities Index, which is based on official house price data for mainstream residential markets, increased by 4.4% in 2015. According to the index, 121 out of the 165 cities tracked by the index recorded residential property price increases in 2015. Based on the growth of residential property prices in the 12 months to the end of 2015, Dublin now sits in 100th position globally. The growth in residential property prices in Dublin outperformed other major global cities such as Chicago (2.5%), Paris (-1.8%), Singapore (-3.6%) and Rome (-3.8%). The Chinese city of Shenzen was the strongest performing city as prices increased by 47.5%, almost 22 percentage points higher than Auckland, the second highest ranking city, where prices increased by 25.4%.
In Europe, residential property prices increased by 2.9%, with Dublin sitting in 28th position. Budapest, Stockholm and Gothenburg were amongst the strongest performing European cities, growing by between 14-16%. The index also suggests that a two tier market may be emerging in Europe. Of the 56 cities included in the index, 20 cities recorded declines in 2015, with the Southern European economies featuring heavily. Cities in Greece, Italy and Cyprus occupy four of the bottom five rankings.
While this is the first edition of the Global Residential Cities Index, one can assume that Dublin’s position in comparison to other cities has fallen considerably in the last 12 months. In the 12 months to the end of 2014, residential property prices in Dublin increased by 22%. If this growth rate had been repeated in 2015, Dublin would have ranked 4th globally and 1st in Europe. The introduction of the Central Bank’sending criteria in January 2015 has depressed the radical growth in prices witnessed in 2013 and 2014 by making it harder for buyers to save for a deposit which in turn has depressed demand for residential property. This is resulting in inflation instead being funnelled through the rental market with rents rising by 9% in Dublin on an annual basis in 2015 according to the latest edition of the PRTB’s quarterly rental index. It has been suggested that a review of the Central Bank’s mortgage lending criteria will take place during 2016.