Knight Frank Prime Global Forecast 2021 & 2022

Knight Frank’s global research teams reveal their prime residential price forecasts for the year ahead.

Key drivers of price growth in 2022

• Normalisation of travel will influence all high-net-worth individual (HNWI) buyer groups: owner occupiers, investors and second home purchasers
• Interest rates rises will be less influential at the prime end of the market where cash purchasers still dominate in several cities
• Inventory levels are at record lows in some prime markets and new construction has been delayed due to the pandemic and blocked supply chains - Sydney, Los Angeles and Singapore are particularly affected
• Amassed savings in developed nations are not yet depleted and wealth has appreciated due to the rise in the value of assets, both real estate and equities
• Second homes in liquid and transparent markets are in demand as HNWIs look to make up for lost time with family and friends

Trends to watch

• The Chinese mainland’s slowdown: The Chinese leadership look steadfast in their goal to control developer financing and restrict credit growth in its push towards ‘common prosperity’. Evergrande’s collapse is unlikely to kick-start widespread contagion but the direction of policy suggests more muted price growth in the medium term
• Stepping away from stimulus: With some central banks taking cautionary steps away from ultra-accommodative monetary policy, asset prices will no longer be artificially inflated
• Higher taxes: Singapore is considering a wealth tax, President Biden has proposed increasing the top rate of tax for highest earners, the UK is reviewing its capital gains taxes and Spain plans to introduce a rent cap for landlords with multiple properties
• Red tape: Property cooling measures, non-resident restrictions and tighter regulation of holiday rental platforms such as Airbnb are high on the agendas of city authorities
• Rental recovery: Top tier cities are seeing rents and demand accelerate as CBDs reopen. Buy-to-let and institutional investment will increase where the numbers stack up
• Greenback to strengthen: The US dollar is forecast to maintain its current strength* (USD/EUR 1.15, USD/GBP 1.34) in 2022 as global economic uncertainty rises and the Federal Reserve looks to tighten monetary policy