Knight Frank reports that average annual rental growth across a basket of 15 global cities held steady at 3.5% in the 12 months to the end of June 2024, matching the rate seen in Q1
This stabilisation marks the end of the slowdown in annual rental growth, which had been evident since the spike in early 2022.
Steady annual growth, but quarterly momentum builds
While annual growth has slowed from the highs of recent years, the current rate is just below the long-run pre-Covid average of 3.8%. More notably, quarterly growth picked up to 1.1% in Q2 2024, slightly exceeding the long-term trend rate of 0.9%.
Eighty percent of the markets tracked by Knight Frank saw rents increase on an annual basis, with Sydney standing out as the top performer, recording nearly 14% rental growth over the past year. Sydney’s rental market has been buoyed by strong immigration, which has outpaced new-build supply since Covid restrictions were lifted.
Top-performing markets and long-term rental growth
Besides Sydney, Tokyo, Berlin, and Frankfurt were the only other cities that saw annual rental growth above 5% over the past year. German markets, in particular, have experienced sustained pressure from limited housing supply, driving both rent and house price increases.
Prime city rents have surged by 27% on average since Q1 2021, with the most significant increases seen in New York (57.1%) and London (56.5%). Other strong performers include Miami (45.8%), Singapore (41.4%), and Sydney (40.9%).
Luxury market dynamics and outlook
In recent years, prime rents have diverged from house prices, with rents underperforming during the Covid-inspired housing boom in 2020 and 2021. However, as interest rates began to rise in 2022 and 2023, rents surged, particularly in cities where workers returned following the end of lockdowns.
Liam Bailey, Knight Frank’s global head of research, commented: “The recent slowdown in rental growth suggests an end to the sharp upward repricing of prime city markets. However, affordability constraints and continued demand against limited supply mean that upward pressure on rents is likely to persist in the medium term.”
Percentage prime rental growth since Q1 2021:
- New York: 57.1%
- London: 56.5%
- Miami: 45.8%
- Singapore: 41.4%
- Sydney: 40.9%
- Toronto: 29.9%
- Berlin: 27.2%
- Los Angeles: 25.0%
- Tokyo: 17.3%
- Auckland: 14.2%
- Monaco: 12.7%
- Frankfurt: 11.5%
- Zurich: 11.3%
- Geneva: 9.2%
- Hong Kong: -0.6%
