Auckland’s runaway house prices have officially ended – on a global perspective anyway – as the city’s property market almost slipped out of a list of the top 100 in the world for fastest price rises.
Auckland, once a high-flyer on the list, dropped to 99th with a 2.2 per cent increase in 2017, according to property consultancy Knight Frank’s global survey of price rises, according to the Guardian.
Berlin emerged as the fastest-rising property market in the world, with the city engulfed by expensive high-rise developments and speculative buying threatening its traditionally low rents and hip arts scene. Prices in Berlin jumped by 20.5 per cent in 2017, according to Knight Frank, with other German cities also displacing cities in China in terms of rising prices.
Berlin, Hamburg, Munich and Frankfurt were ranked in the top 10 in the world for price rises, with several Dutch cities not far behind.
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Meanwhile London, de-powered by Brexit, was ranked 101st, with a 2 per cent gain while Auckland’s drop was at least partly attributed to the ban on foreigners buying existing houses.
Attempts by authorities in Vancouver to quell its soaring prices – including a 15 per cent foreign buyer tax – appear to have stalled, with prices in the Canadian city jumping by 16 per cent in 2017, the fourth fastest in the world.
Berlin’s move to the top of risers followers several years of soaring prices; the average property price has increase by more than 120 per cent since 2004, according to the Guardian.
Foreign buyers have flocked into Berlin’s residential and commercial property market, with the US investor Warren Buffet agreeing a deal last month to acquire a top-end real estate agent in the city that sells apartments for as much as €3.8m ($6.37m).
The boom has been fuelled by cheap borrowing and a fast growing population. The city’s population has grown by about 50,000 a year over the past five years to 3.5m. It is projected to reach 4m by 2035.
The surge in prices has prompted warnings of a bubble waiting to burst. In February, Germany’s central bank, the Bundesbank, suggested property in many German cities was at least 15 per cent overpriced and could be as much as 35 per cent overpriced in Berlin.
But, to buyers from London or New York, Berlin remains cheap even after years of 10 per cent annualised rises. Apartments in prime parts of the German capital fetch only about a third of the price of equivalent-sized properties in London.
On immowelt.de, a popular German property website, apartments in NeuKölln, which is regarded as one of the hippest neighbourhoods, can be found for €175,000 ($293,000) and are marketed by the agents as “the cleverest investment”.
Commercial property is also booming. Berlin’s Sony centre complex, emblematic of the city’s regeneration after the fall of the Berlin Wall, was bought for €1.1bn ($1.84bn) in October by the pension fund of Ontario’s municipal employees. Meanwhile Norway’s state pension fund has paid about €400m ($671m) for the Mitte headquarters of media group Axel Springer.
10 fastest rising property markets in the world in 2017
1. Berlin 20.5 per cent
2. İzmir 18.5 per cent
3. Reykjavik 16.6 per cent
4. Vancouver 16.0 per cent
5. Hong Kong 14.8 per cent
6. Budapest 15.5 per cent
7. Hamburg 14.1 per cent
8. Munich 13.8 per cent
9. Rotterdam 13.4 per cent
10. Frankfurt 13.4 per cent
99. Auckland 2.2 per cent
Source: Knight Frank global residential cities index
