Each year Mercer releases a ranking of the quality of living in cities based on an extensive list of criteria. Find out what the real estate market is like in the Top 3 Cities for Quality of Living.
Top 3 Cities for Quality of Living
The Mercer Quality of Living Ranking is detrimental to predicting real estate market outlooks for areas due to their intensive look at the factors which make cities desirable for expatriates and international business people. These same factors are regularly found to be the most important when appraising the value of an area. However, Mercer does not advise investments based on this information. Their website states the information is for information’s sake, though any wise investor can see its applications.
Even with the uncertainty brought about by Brexit Europe continues to provide a large number of cities which rank for the highest quality of living. Cities are changing positions regularly all throughout the rankings due to investments in infrastructure, housing, and other attractive features. Here is a look at the real estate markets of the cities which ranked in the top three for the Quality of Living Survey.
#3 Munich, Germany
One of the fairest aspects of the Mercer ranking for Quality of living is that there is the possibility of two cities sharing a title. The qualities which make these cities desireable are fairly measured. Meaning that ties do exist which put neither ahead. However, they may be better off in differing aspects. For example, in third place, Munich, Germany, and Auckland, New Zealand are tied.
Munich is the third most populated city in Germany with a population of 1.3 million. Needless to say, this large population requires a growing housing market. Home prices in Germany continue to rise as immigrants enter the country and add to the overall demand. Unemployment in Germany is low, meaning buyers have the capital to purchase homes. Accordingly, apartment, home, and new home prices are seeing regular increases. The only downsides to real estate in Germany are a pro-tenant market and the moderate rate of rental income tax. Although Munich is listed in Mercer’s ranking the highest rental yields are found in Berlin. Thus showing that factors related to the quality of living are not always the best indicators for investment.
#3 Auckland, New Zealand
Auckland is the largest city in New Zealand, holding the largest retail and commercial markets in the country. It is currently going through a gentrification process. Seeing more and more middle-class families move into areas which were previously considered undesirable. However, their low prices are attracting new families. Causing prices to rise and phasing out the previous inhabitants. Prices are not rising as quickly as they could due to increasing mortgage rates. House prices are high and non-resident purchases are seeing increasing restrictions. The economy remains stable and low-income taxes are attracting investors.
#2 Zurich, Switzerland
Switzerland previously saw housing prices rise for a period of 15 years, however, measures have been taken to slow them. The measures have finally started paying off. The most powerful price increases were seen in owner-occupied residences. Switzerland has a strong and stable economy with low transaction costs being a key factor in real estate investment. The negatives are high rental taxes, a pro-tenant market, and ownership limits. Zurich has seen a price decline since 2016 and annual growth of the economy at a steady rate. Rental yields in Zurich, unfortunately, leave much to be desired.
#1 Vienna, Austria
Austria has a stable economy and strong yields for rental properties. Issues arise from their complex pro-tenant market and high rental taxes. House prices are rising in Austria overall but not in Vienna. One benefit of the area is the lack of restrictions on foreigners purchasing properties in Austria. Rental yields are higher in cheaper locations. One issue for investors currently is Austria’s progressive tax laws. These laws charge larger property owners more which may make the common investor think twice before parking their capital in the country.
Taking into account these factors an investor can decide some of the better areas to purchase a property. Though they may not always receive the best returns on investment they can be assured that the areas are unlikely to lose value.