The latest Global Residential Cities Index Q2 2019 has just been released by Knight Frank. The Index revealed that Budapest (24.2%) was usurped by the Chinese city of Xi’an (25.1%) in Q2 this year as the city with the highest rate of annual growth.

Overall, the index continues to track lower recording average growth of just 3.5% in the year to June 2019, down from a high of 6.7% at the end of 2016. Rising economic uncertainty, trade tensions, political crises and affordability concerns are leading to weaker sentiment in mainstream housing markets, says Knight Frank.

In Europe, Porto (13.6%), Zagreb (11.4%) and Athens (11.2%) join Budapest in the top ten. Rising from a low base, prices in all three cities still sit below their pre-financial crisis peak. Dutch and Spanish, along with Latin American capitals, also rank highly.

Of note is the widening gap between cities in the same country – this includes Wellington (9.1%) and Auckland (-2.9%), Ottawa (6.3%) and Vancouver (-4.9%), Lyon (9.2%) and Marseille (0.3%) as well as Phoenix (5.8%) and Seattle (-1.3%). Local economic fortunes, opposing market cycles and in some cases, tighter property market regulations are behind this divergence, according to the Index.

A number of tier one cities find themselves in the bottom third of the index rankings this quarter, including London, New York, Auckland, Rome, Dubai and Sydney. In a number of these cities, the prime sector continues to outperform the mainstream market, whilst in others, analysis of price movements in the last quarter suggest their rate of decline is starting to slow.