Affluent Home Buyers Are Driving up Prices in Southern European Cities
2 min
Lisbon was home to the fastest growing luxury-home prices in the first half of this year, according to a report Monday from Savills.
With gains of 4.2% in the six months through June, the Portuguese capital bested the performance of any of the other 29 prime property markets globally analysed by the property firm.
Cities in southern Europe and the Middle East saw their high-end home sectors perform best, with Lisbon followed by Amsterdam, Madrid and Athens, which all logged capital value increases above 3% over the same time. Dubai rounded out the top five with growth of 2.9%.
In southern Europe in particular, prime prices are being driven by a lack of supply, and American buyers have become a “key prospective buyer base,” Savills said, “thanks to a comparatively strong dollar and a growing interest in the lifestyle on offer.”
In the U.S., meanwhile, persistently high interest rates have impacted demand across the. housing market, and as a result, prime residential prices have fallen in three of the four U.S. cities monitored in the report, with only San Francisco seeing positive growth of 0.7% for the first half of the year.
Los Angeles ranked at the bottom of the list, with luxury prices falling roughly 4%.
Across all 30 cities analyzed by Savills, prime residential property prices “remained resilient over the first half of 2024,” recording an average growth of 0.8% and outperforming the 0.6% growth predicted for the year as a whole, the report said.
More than half (60%) of the cities recorded positive capital growth, “reflecting a level of relative confidence in the asset class,” according to Savills.
Looking ahead, “we predict an average capital value growth of 0.5% for the second half of the year, which would bring total 2024 growth to 1.3%,” said Kelcie Sellers, associate director at Savills World Research in the report.
“The ongoing supply-demand mismatch for high-end residential product is projected to fuel price growth in European cities such as Amsterdam, Lisbon and Barcelona, where 2% to 3.9% is forecast in the second half of 2024.”
This article first appeared on Mansion Global
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A record-breaking $11 million sale at The Centennial Collection has set a new benchmark for luxury apartment living in Bondi Junction.
As interest rates, inflation and market sentiment fluctuate, investors are being urged to focus on data, not panic.
Australia’s housing affordability crisis is being fuelled by chronic undersupply, planning delays and rising development costs, as politicians continue to focus on the wrong solutions.
3 min
Australia’s housing crisis will not be solved by first-home buyer incentives or tax changes alone, with leading property figures warning governments must tackle supply constraints if affordability is to improve.
Speaking at the Kanebridge Quarterly Property Leadership Summit in Sydney last week, expert project marketing specialist Sam Elbanna, property investor and fund manager Paul Miron and property consultant Karla McNeice said that a lack of housing supply remained the central issue facing the market.
Elbanna, Director of CPM Realty with more than 30 years’ experience in project sales, argued that successive governments had focused too heavily on stimulating demand rather than addressing the barriers preventing new housing from being delivered.
“The misconception is that politicians think the way to solve the housing crisis is to drive demand,” he said.
“The reality is that’s not the way. This is a supply-side problem, and it needs to be solved on the supply side.”
Drawing on his experience in project sales, Elbanna said policies designed to help first-home buyers often had unintended consequences, pointing to previous grants that ultimately flowed through to higher property prices.
Instead, he said developers were facing increasing red tape, approval delays and rising costs, which were discouraging new housing supply.
“In the absence of stock, demand exceeds supply,” he said.
Miron, a Co-Founder and Fund Manager of Msquared Capital, said the housing debate had become overly focused on tax policy while overlooking broader structural issues.
He argued that affordability challenges stemmed from a combination of factors, including planning constraints, supply shortages, migration levels and interest rates.
“No-one can be 100 per cent certain on the real reason for property prices is going up,” he said.
“The reason why property prices are higher is a combination of interest rates, lack of supply, migration, vacancy rates and maybe taxes play a role.”
Miron was critical of recent federal housing policy changes, warning they could reduce the number of new homes being built and further constrain supply that was even highlighted in the budget.
He also highlighted the importance of the property sector to the broader economy, noting that residential real estate and related industries employed more than one million Australians.
McNeice, who advises developers on sales strategy and market intelligence, said understanding buyers had become increasingly important as affordability pressures intensified.
While affordability remained a major consideration, she said today’s buyers were focused on value rather than simply price.
“People are looking for value for money,” she said.
She said buyers were increasingly evaluating factors such as transport connections, walkability, nearby amenities and flexible living spaces that could accommodate changing family needs.
“What infrastructure is going on? Can I walk to the shops? Can I meet people at the local cafe?” she said.
The panel also discussed the mounting pressures facing developers, with Elbanna arguing that many projects become financially unviable from the moment a site is purchased.
“The viability of a development happens at the moment the site is bought,” he said.
He said rising construction costs, higher interest rates and overly optimistic feasibility assumptions had left some developers exposed as market conditions changed.
While acknowledging the growing number of smaller and first-time developers entering the market, Elbanna said property development required expertise across finance, construction, marketing and legal disciplines.
“It is actually a business that requires a level of expertise,” he said.
Looking ahead, the panel agreed opportunities remained in the market despite current challenges.
Miron said property should continue to be viewed as a long-term investment and cautioned against trying to time short-term market movements.
McNeice said success would increasingly depend on identifying projects that genuinely met changing buyer expectations.
Elbanna said affordable housing remained achievable, but developers needed to deliver more than just homes.
“We can provide affordable housing in this country,” he said.
“But we’ve got to wrap that affordable housing with the things that people want.”
As Australia’s housing affordability debate intensifies, the panellists agreed on one point: without a meaningful increase in housing supply, demand-side measures alone are unlikely to solve the nation’s property challenges.
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