Spare a thought for putative homebuyers in Phoenix, Arizona. The city is home to the fastest-growing house prices in the US, with prices up by almost one-third in 2021.
It means that someone looking to buy an average home in the metropolis now needs to find almost $100,000 (€93,108) more to buy a home, with the average price as of the end of last year standing at a hefty $394,850.
Such a price surge is not a problem that’s exclusive to the US city; right across the world house prices are booming.
Indeed, according to a recently published Knight Frank global residential cities index, city house prices across the world are now rising at their fastest rate in almost 18 years.
Of the 150 cities tracked by the index, 140 saw house prices increase in 2021. From Phoenix to Cardiff, and from Sydney to Malmo, house prices are going up, seemingly at an unstoppable rate.
While Ireland is home to its own much-publicised price boom, the report puts Dublin in the ha'penny place when it comes to rising house prices, as the city only ranks 47th out of the 150 cities profiled.
Dublin prices rose by 12.9 per cent in the year to end-December 2021, and of course they haven't stopped growing since; updated data from the Central Statistics Office shows that prices in the capital rose by 13.5 per cent in the year to end-February 2022.
Compare this, however, with the aforementioned Phoenix, or Hobart in Tasmania, where prices are up by 33.7 per cent in a year. The Turkish cities of Istanbul (+63.2 per cent), Izmir (+58.5 per cent) and Ankara (+55.9 per cent) lead the report, but the scale of their ascent is largely due to inflation at a local level.
More "real" growth is seen across the US cities of Miami (+27.4 per cent), Dallas (+26 per cent) and San Diego (+25.9 per cent). Down under, the house price boom continues with Canberra following Hobart with price growth of 30.7 per cent, and Darwin (+25.5 per cent) and Sydney (+25.4 per cent) close behind.
Reasons for growth
While a myriad of factors may be behind this, across the world, as in Ireland, the savings boom enjoyed by many households during successive lockdowns is cited as one of the reasons driving price growth.
In addition, the more house prices rise, the more equity, or the amount of value in a home that is owned by a homeowner rather than the bank, also increases.
“In some cases, this wealth [from savings and increased equity] has been used to upgrade existing homes or purchase a second property,” the report says.
As the report notes, price growth in Phoenix has added almost $97,000 in one year to a pool of equity.
“This surge [in values] isn’t atypical of cities in advanced economies,” adds the report. Indeed in Dublin, the average home increased in value by about €53,000 to €509,588 over the year to February.
Will prices keep rising?
The report isn't sure if the bullish growth can be sustained however. With interest rates already starting to rise – New Zealand, the UK and the US have all hiked base rates so far in 2022 – buying property with a mortgage is going to get more expensive. This can have a knock-on effect on consumer sentiment, which is already starting to weaken due to the geopolitical crisis in Ukraine, as well as the cost-of-living crisis and the upwards pressure on inflation.
As a result, the report notes that the switch from a sellers’ market to one with more opportunities for buyers “may be closer than we thought”.
Some faint signs of hope then, for would-be homebuyers in Ireland, that the current rate of house price growth may not continue too much longer.
Where house prices are rising the fastest
Cities ranked by % growth in 12 months to end-2021
1 Istanbul +63.2
2 Izmir +58.5
3 Ankara +55.9
4 Hobart +33.7
5 Phoenix +32.5
13 Sydney +25.4
33 Toronto +16.8
42 New York +13.8
47 Dublin +12.9
111 London +5.1
Source: Knight Frank
