House prices rise fast in some of the world’s most liveable cities

House prices are rising fast in some of the world’s most liveable cities, which could threaten their status as an attractive destination over time, experts warn.

But, it is still possible to find capitals where housing is relatively affordable and which rank highly for liveability.

Auckland in New Zealand topped the rankings of The Economist’s Global Liveability Index 2021 due to its success in containing the COVID-19 pandemic.

Seven of the top 11 cities were in Australia or New Zealand, where suppression of the virus allowed children to return to school, cultural attractions to stay open and residents to live relatively normal lives.

The Economist’s global liveability index 2021

Rank City Location
1 Auckland New Zealand
2 Osaka Japan
3 Adelaide Australia
4 Wellington New Zealand
4 Tokyo Japan
6 Perth Australia
7 Zurich Switzerland
8 Geneva Switzerland
8 Melbourne Australia
10 Brisbane Australia
11 Sydney Australia

At the same time, low interest rates have pushed house prices higher across both sides of the Tasman.

Auckland house prices soared 21.6 per cent over the past year to $NZ1.125 million ($A1.046 million), while Wellington — ranked fourth — recorded a 19.2 per cent rise to $NZ870,000, on Real Estate Institute of New Zealand data.

Residents would expect to spend a double-digit multiple of their income on buying a house, ANZ New Zealand chief economist Sharon Zollner said.

“Housing affordability has become an increasing problem in New Zealand,” she said.

“You’ve got to question how desirable it would be for someone to move to New Zealand, move to Auckland or Wellington and look at what their income would buy.

“It does certainly reduce the appeal of the city as a place to live, if that house price multiple to income gets out of whack, which I think everyone would agree it has.”

In Australia, Adelaide ranked third on the list, and the median dwelling value across houses and units there has jumped 11.8 per cent over the past year to just over $500,000 on CoreLogic figures.

It was followed by Perth at sixth (up 8.5 per cent in a year to $521,000), Melbourne at eighth (up 5 per cent in a year to $740,000), Brisbane at 10th (up 10.6 per cent in a year to $574,000) and Sydney at 11th (up 11.2 per cent in a year to $970,000).

2 Hill Avenue Cumberland Park
Adelaide was ranked as the third-most liveable city in the world.

The broad-based gains are largely due to low interest rates, HSBC chief economist of Australia and New Zealand Paul Bloxham said.

“A big fall in interest rates to very low levels, and the likelihood they’re going to stay low for a considerable period, is one of the factors driving up house prices,” he said.

Another reason for high house prices in major cities is a lack of sufficient investment in transport infrastructure over time, he said, with strong demand for central…

Read MoreHouse prices rise fast in some of the world’s most liveable cities

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