As the World Cup enters its latter stages, I thought I’d take a look at who would win the international competition when it came to house prices.
The reigning football World Champions, Germany, may have crashed out at the group stage, but their property market certainly isn’t crashing. A recent Knight Frank study of 150 cities around the world showed prices in Berlin were the highest rising in the world; increasing 21% last year! The German cities of Hamburg, Munich and Frankfurt all experienced price growth of between 13% and 15% too, putting them in the top ten.
Property prices were reported to have increased an average of 4.5% around the globe in 2017, compared to 7% the year before. With global GDP rising just 3% last year, it suggests that property prices continue to outstrip economic common-sense across the world.
It’s interesting to note though that in certain areas, like in the example of Berlin and the rest of Germany, house prices have risen due to their relative affordability compared to the higher priced cities. One good tool to work out the affordability of an area is to compare house prices to local salaries. Prices in Berlin may have increased by 21% last year, but with their affordability ratio now sitting at 10.4 times earnings, it still has room to grow when compared to the other economic powerhouse cities of Hong Kong (45.6x), London (20.6x) and New York (14.9x).
Referring back to the 32 nations that made it to this Summer’s World Cup, 90% of the countries fall within a reasonably tight range of 7 - 18 times income when looking at their average property prices. The cheapest country to purchase a property is Saudi Arabia, where locals need just 2.7 times their annual income to buy a home of their own. On the other end of the scale (and by some margin) is the most expensive place to buy in the world - Senegal. Foreign investment, particularly in the capital Dakar, by regional elites who consider it a relative safe haven in turbulent West Africa (and a home for laundered money if reports are correct) has meant that the average Senegalese will need 286.8 times their income to buy a home!
It may surprise you to hear that in England, where we commonly complain about out-of-reach property prices, homes are actually far more affordable than most countries around the world when compared to our income (8.9x). In fact, much of Europe is generally in the ‘cheaper than average’ category, whereas the South American and African nations tend to be the more expensive.
The overall average of the World Cup nations, excluding Senegal as it skews the result so greatly, is 11.8 times income. The closest nation to being ‘average’ is France, whose homes cost 11.5 times their income and who were my pre-tournament pick to lift the FIFA World Cup trophy.
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(This article was featured in the Chichester Observer's property section on July 05, 2018)
Clive Janes, CRJ Lettings
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