_Urban house prices around the world rise at their fastest rate for two years

Urban house prices across 150 key cities around the world increased by 5.5% on average in the year to June 2016, according to the Knight Frank Global Residential Cities Index. This represents the index’s strongest annual rate of growth in the last two years.

Kate Everett-Allen May 18, 2016

Of the 150 cities tracked by the index, 114 recorded positive annual price growth in the year to June and, of these, 31 cities saw price growth exceed double digits.

The Chinese city (and rapidly-expanding technology hub) of Shenzhen continues to lead the rankings, although its annual rate of growth has slowed significantly from 63% last quarter to 47%.

Due in part to Shenzhen’s slower rate of growth, the gap between the strongest and weakest performing city housing market has shrunk from 74 percentage points in March 2016 to 59 points in June.

Six Chinese cities (Shenzhen, Shanghai, Nanjing, Beijing, Guangzhou and Hangzhou) all sit within the top ten rankings for annual price growth.

Their ascension has been rapid. According to data from China’s National Bureau of Statistics the average annual rate of growth for the top ten performing Chinese cities equates to 22% in the year to June, a year earlier the comparable figure was -1.1% for the same ten cities.

A number of the municipal governments in China are introducing a new raft of stringent cooling measures at a local level to dampen sales, these range from limiting non-locals to single home purchases and tightening rules for local residents in relation to second home purchases.

In Europe, Budapest leads the rankings with prices accelerating 24% on an annual basis but cities in the UK, the Netherlands and Scandinavia are also well represented. Four of the continent’s top 10 performing cities are in the UK: Bristol, London Nottingham and Birmingham.

The index tracks the period until the end of June, our next edition will provide some insight into the impact of a number of key political and economic events; the UK’s post EU referendum trajectory, the impact of Vancouver’s new tax for foreign buyers and the extent to which China’s cooling measures are taking effect.

The map below tracks the change in city house prices (split by percentiles) from 1987 to Q2 2016 and highlights the sudden pockets of growth that have emerged in key world regions in recent decades.