The growth in luxury home prices worldwide is losing momentum due to the high interest rates still affecting many markets, such as those in the US and Europe. However, some cities are experiencing a counter-cyclical trend, including Lisbon. The latest data from Knight Frank – which analysed 44 cities – shows that prices in the Portuguese capital are still rising rapidly, making it the second city globally with the highest acceleration in prices for the second quarter of this year.
Recent data from the Prime Global Cities Index, compiled by Knight Frank, reveals that the annual growth in home prices worldwide has slowed, dropping from 4.1% in the first quarter of 2024 to 2.6% in the second quarter of 2024.
“The slowdown in price growth this quarter in prime markets reflects the fact that, without further stimulus from interest rate cuts, the price increases we have seen in recent quarters are losing momentum,” explains Liam Bailey, Global Head of Research at Knight Frank, as quoted in a statement. He also adds that “the greatest influence on future price growth rests with central banks and their confidence in reducing rates further over the next 12 months.”
House prices in Lisbon have 8th highest increase in the world
However, some residential markets are experiencing a counter-cyclical trend. This is the case in Lisbon, where house prices rose by 4.7% in the second quarter of this year, an increase of 3 percentage points compared to the previous quarter (1.8%), according to the report. Thus, Lisbon even recorded the second highest acceleration in house prices during this period, trailing only Stockholm, which tops the podium in terms of growth.
Looking at the ranking of the highest increases in luxury house prices across 44 cities, Lisbon is in 8th place, behind only Manila, Mumbai, Delhi, Los Angeles, Miami, Nairobi, and Madrid. This means that the cost of buying a home in Lisbon is rising at a faster rate than in major cities like Singapore, Sydney, Monaco, or Tokyo, for example.
This price growth in the city of Lisbon shows that the Portuguese market continues to be attractive for foreign investments, and that our economic stability provides positive signals about the market,” comments Francisco Quintela, CEO of Quintela + Penalva, a partner of Knight Frank in Portugal.
For his part, Liam Bailey agrees that the Portuguese capital “continues to prove very attractive to investors” and adds that the “quality of the product is also increasingly attracting international investors.”
House prices accelerate globally with a 6.5% increase in Portugal
House sales in Portugal (and Europe) fell throughout 2023, leading to a cooling in the rate of price increases. However, recent decreases in mortgage interest rates and gains in purchasing power due to slowing inflation are aiding the recovery of the housing market. These factors, combined with a housing supply shortage, help explain why house prices in Portugal saw an annual growth of 6.5% at the start of this year, outpacing the global housing cost increase of 3.6%. The latest report from Knig
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