Interest rate hikes will not dim the allure of property

Interest rate hikes will not dim the allure of property

The pandemic surge in property prices has reached around the globe. From Turkey to New Zealand, from Russia to Australia, house prices have soared in the past year.

Overall, prices rose 9.2 per cent across 55 countries in the 12 months to the end of June, according to research from Knight Frank, a property agent. The developed world led the way with a 12 per cent gain, well ahead of the 4.7 per cent increase in developing countries.

The price surge is a result of the gush of cheap money that central banks released into the markets as their co-ordinated contribution to helping the global economy avoid disaster during the Covid-19 outbreak. The funds helped to reassure investors that asset prices would be stabilised in the face of the pandemic’s economic shocks.

However, as the charts show, the advances largely bypassed London and New York, and other leading global cities, such as Tokyo, Hong Kong and Paris, where prices marked time, albeit at historically high levels. Instead, the increases were posted in centres where investors saw catch-up opportunities: San Francisco, Los Angeles and Toronto, for example, and Shanghai, Seoul and Moscow.

In some cases, expatriates have been buying property in their home countries, often out of concern that,