20 Most Expensive Housing Markets in the World
In this article, we will be taking a look at the 20 most expensive housing markets in the world. To skip our detailed analysis, you can go directly to see the 5 most expensive housing markets in the world.
Real Estate has always been a complex industry, with high stakes and is considered to be one of the most important drivers of the economic growth of a country, as well as urban development worldwide. The real estate industry has been around for a long time and has evolved with society and technology. Today, it includes different types of properties like homes, offices, shops, and land. It plays a crucial role in creating vibrant communities and strong economies. A booming industry with high demands and high prices was affected drastically in 2020 when the pandemic hit and the world came to a standstill. The global pandemic caused significant damage to financial markets worldwide. With COVID-19 spreading and economies in turmoil, businesses closed, supply chains were disrupted, and unemployment rates increased. To help mitigate the financial impact of the pandemic, the Federal Reserve reduced interest rates to nearly zero in April 2020. As a result, mortgage rates for long-term loans also decreased. Lower interest rates allow borrowers to build home equity more quickly. However, it's important to note that in the current economic situation, interest rates can rise just as rapidly as they fell. The move to a "work from home" situation became the new normal, and demand for office spaces declined as people started setting up their home offices.
To understand the most expensive housing markets in the world, we need to understand that there are many factors that contribute to the high costs of living all over the world. Skyrocketing real estate prices and limited housing availability are major contributors. High demand, limited space, and speculation drive up property prices and rental rates. Most expensive cities often have higher prices for everyday goods, including groceries, dining out, clothing, and transportation. Factors like import taxes, high operational costs for businesses, and higher wages can influence the prices of goods and services. Utility costs, such as electricity, water, and heating, can also be higher in expensive cities with infrastructure maintenance, supply-demand dynamics, and geographical considerations all potentially impacting utility prices. Some expensive cities have renowned healthcare systems but at a significant cost. Medical treatments, insurance premiums, and access to quality healthcare facilities contribute to the overall cost of living. Cities with prestigious educational institutions may have higher costs for schooling and higher education. Tuition fees, books, and other education-related expenses can significantly impact the cost of living for families. High-cost cities often have higher tax rates to support public services, infrastructure, and social welfare programs. Income tax, property tax, and sales tax rates can contribute to the overall cost of living.
"Despite widespread economic uncertainty, 2021 represented a record-breaking year for the global real estate realm, with global commercial sales volumes exceeding the 2020 total by 59% and the previous peak observed in 2019 by 22% - far above the expectations voiced in last year’s Global Outlook," this was reported by PWC in their Emerging Trends in Real Estate - The global outlook for 2022 report. And in their 2023 report, they stated that the real estate industry was finally moving back towards its pre-COVID patterns. In April 2023, Forbes reports that mortgage rates increased by approximately 15 basis points and even though they're not as high as they were during the start of 2022, it is still challenging for people to consider buying a home especially first time home buyers. Danielle Hale, Chief Economist at Realtor.com, expressed in an email that if the present economic conditions continue with high mortgage rates and home prices coupled with limited housing inventory, the market can expect a gradual and challenging journey ahead with a few obstacles along the way.
REITs are companies that own and sometimes manage real estate properties that generate income, like apartments, warehouses, self-storage facilities, malls, and hotels. People find them attractive because reliable REITs have a history of paying significant and increasing dividends. However, it's important to note that the potential for growth also comes with risks that vary depending on the type of REIT. Vornado Realty Trust (NYSE:VNO) is a fully integrated REIT and is one of the leaders in New York City, one of the most expensive cities in the world. The New York division comprises 65 properties, totaling approximately 26.4 million square fee. Another popular REIT in the United States of America is Empire State Realty Trust, Inc. (NYSE:ESRT). As the name suggests, they own the Empire State Building which is one of most iconic buildings in the world.
The tech industry is also a major driver of economic growth in many expensive cities, and this is likely to continue in the coming years. This could lead to increased demand for housing in these cities, as well as higher property values. As it is a knowledge-based industry that attracts highly skilled workers who are willing to pay high wages, this leads to a concentration of wealth in these cities, which in turn drives up demand for housing. In addition, the tech industry is often associated with innovation and creativity, which can make these cities more attractive to live in. This further increases demand for housing, and can lead to higher property values. For example, the tech industry is a major driver of economic growth in San Francisco. In 2022, the tech industry accounted for 20% of the city's GDP. This high concentration of tech jobs has led to a significant increase in demand for housing in San Francisco. The median home price in San Francisco is now over $1 million, and the city has one of the highest rates of homelessness in the country.
The implications of this trend for people who live in expensive cities or who are considering moving there are significant. For those who are already living in these cities, the increasing demand for housing could make it more difficult to afford to stay. This is especially true for low-income families and individuals. For those who are considering moving to expensive cities, the high cost of housing could make it difficult to afford to live there.
Methodology
To find out the 20 most expensive housing markets in the world, we took data from 3 websites: CNN, Global Property Guide and Cobalt Recruitment. We then assigned a score to each city/country based on its ranking. For example, if a city is ranked number 1 in one list, it was given a score of 50/50 = 1, while second placed was given a score of 49/50 = 0.98 and so on. We then summed up and sorted all places from all 3 lists, from highest to lowest, to calculate our own rankings. Since our lists included countries and cities both, we assigned the rank to the country if a city was part of the list. For example, if London ranked high on the list, we gave that ranking to the country U.K. and mentioned the specific city in brackets. So now, let's take a look at the 20 most expensive housing markets in the world, starting with number 20.
20. Czech Republic
With a rich history and culture, the Czech Republic has a strong economy, which means that wages are relatively high. This also contributes to the high cost of living in the country.
19. Netherlands
The Netherlands is a great place to live, but it is not cheap. The cost of living is relatively high, due to factors such as high taxes and wages. The demand for housing is also very high, which drives up prices.
18. China
The demand for housing in China is extremely high, especially in cities like Shanghai due to the city's status as a global financial hub and its rapid economic growth. This has led to high prices for housing, making it difficult for many people to afford to live in the country. The high cost of housing in China has a number of negative consequences. It makes it difficult for many people to afford to buy a home, and it can lead to social unrest.
17. Sweden
The cost of living in Sweden is quite high, though it is showing signs of easing. Stockholm, the country's capital city, is by far the most expensive place in the country.
16. Australia (Sydney)
One of the most expensive housing markets in the world, the cost of living in Australia has skyrocketed over the past year, with food, travel, medical care, and electricity all seeing significant increases.
15. Switzerland (Geneva)
Switzerland is considered to be one of the most beautiful countries in the world, with it's scenic mountains. However, living there is pretty expensive, especially in popular cities like Genva. Geneva is the second most expensive city in Switzerland, and it is one of the most expensive cities in the world.
14. Norway
Even though Norway, like most European countries, has high wages, it also is expensive to live in. Norway.The demand for housing in Norway is very high, due to the country's beautiful scenery and high standard of living. This drives up the cost of housing, especially in major cities.
13. Taiwan
The demand for housing in Taiwan is very high, due to the country's rapid economic growth and urbanization. This drives up the cost of housing, especially in major cities.
12. Finland
This European country is although the happiest country in the world, The Finnish euro is a strong currency, which means that goods and services imported from other countries are more expensive. This also puts upward pressure on the cost of living in Finland.
11. India
A popular country globally, India is one of most expensive housing markets in the world. The cost of living in major cities like Mumbai and Delhi is among the highest in the world, due to factors such as high rent, food prices, and transportation costs.
10. Canada
An important destination for immigrants, the cost of housing in Canada is among the highest in the world. This is due to a number of factors, including the country's high demand for housing, its limited supply of land, and its strict zoning regulations.
9. Austria
Austria is a beautiful country with a high standard of living. There are a number of reasons why Austria is an expensive place to live. These include the country's relatively high taxes, its central location in Europe, and its high demand for housing.
8. Singapore
The reason Singapore is on this list is because there is not much land and taxes are high. The cost of housing, transportation, and food are all very high.
7. France
France is an expensive place to live because of the high rent and food prices. The high cost of living in France is due to a number of factors, including the country's high standard of living, its strong currency, and its relatively small economy.
6. Japan
There are a number of factors that contribute to the high cost of living in Japan, such as the country's high standard of living, its strong currency, and its relatively small economy. Rent in Japan is notoriously high, especially in major cities like Tokyo. The average rent for a one-bedroom apartment in Tokyo is around ￥100,000 per month.
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Disclosure: None. 20 Most Expensive Housing Markets in the World is originally published at Insider Monkey.