Overall capital values in major global cities will remain positive this year, with a luxury home price growth of 0.6% predicted across the 30 cities Savills analyzed in its Prime Residential World Cities Index, according to a report from the British real estate company Friday.
This price growth is down from the 2.2% registered in 2023.
Of the 30 cities, Savills has forecasted that 13 will equal or increase price growth this year, with Sydney and Dubai leading, as Savills predicts both cities will benefit from increases in their high-net-worth populations.
In Sydney, which led the 30 global cities, there’s high demand for luxury homes, but supply is low. With this, Savills is forecasting a price increase between 8% and 9.9%. In 2023, the Australian city saw a capital value growth of 6.8%.
Dubai, on the other hand, had the largest price growth last year, with home prices jumping by 17.4%. This year, Savills predicts the U.A.E. city’s housing activity will return to more normal levels, with price growth between 4% and 5.9%.
Cape Town, Barcelona, Madrid and Kuala Lumpur are among the handful of cities that follow Sydney and Dubai in price growth. In each of these four cities, prices per square foot are below $800, and a 2% to 3.9% price increase is expected, according to the report.
On the flip side, 17 cities are predicted to see a drop in price growth this year. Hong Kong—where home prices already began to suffer last year—could see prices drop by 10% this year. Singapore and San Francisco could also see significant decreases in home prices, with Savills predicting a 2% to 3.9% drop in both cities.
“In the face of ongoing economic uncertainty and a higher interest rate environment, prime residential markets in world cities were muted in 2023 following two years of significant gains,” Kelcie Sellers, an associate at Savills World Research, said. “Growth is forecast to slow further in 2024 as markets return to more normal conditions, but will broadly remain in positive territory.”
Though fewer luxury home buyers rely on mortgages than the overall housing market, Sellers added that “many potential buyers and sellers will adopt a ‘wait to see’ approach in a higher interest rate environment.”
