Prime residential prices performed better than expected in 2020. Not only did the PIRI 100, our annual assessment of prime residential prices across 100 locations around the world, register growth, but at 1.9% it eclipsed its 2019 performance of 1.8%.
This positive headline conceals a more nuanced picture. In 2020, 29% of locations saw prices decline year-on-year, up from 21% in 2019. Conversely, five markets registered double-digit price rises in 2020, compared with just two over the previous year.
Auckland leads the index with average prices ending the year 18% higher. New Zealand’s handling of the Covid-19 crisis, its rapid economic recovery, ultra-low mortgage rates and a limited supply of quality stock were behind the surge. Expect some intervention in 2021 as the government looks to rein in price inflation by tightening lending rules or raising taxes.
Asian cities occupy the next three rankings: Shenzhen (+13%), Seoul (+12%) and Manila (+10%). The speed at which some Asian cities, particularly Chinese Mainland markets, rebounded was the surprise trend of 2020. By 26 March, property sales volumes across 30 major Chinese cities had returned to the average daily levels observed in 2019, according to data from Capital Economics.
Despite Asian markets occupying a number of the higher PIRI rankings, Australasia and North America were the top-performing regions in 2020, averaging annual growth of 4.9% and 6.3% respectively. Both regions saw a surge in pent-up demand as lockdowns eased and homeowners re-evaluated their lifestyles.
Perth (+4%) was Australia’s frontrunner, and Sydney (+1%) registered its highest volume of prime sales ever in Q3 of 2020. Grounded by travel bans, Australia’s luxury buyers focused on building their property portfolios at home, buoyed in part by the country’s bullish stock market.
In North America, from The Hamptons to Florida and Aspen, suburban space, coastal retreats and mountain air were in demand. Ten of the 11 North American markets tracked in the PIRI 100 sit within the top 20 rankings, with San Diego out in front. Palm Beach was a key super-prime hotspot in 2020, recording 20 sales above US$20 million, up from ten in 2019.
New York (-5%) struggled to gain momentum in the first half of the year as the pandemic took hold, but finished on a more optimistic note with the number of signed contracts in Manhattan up 14% in December year-on-year, and listings down 31%. Low construction volumes mitigated larger price falls. The Real Estate Board of New York estimates that total construction activity in 2020 was the city’s lowest in nearly a decade.