Global highs and lows

UK property group Knight Frank provides interesting insights into the home-buying patterns of the world’s super rich in its latest Prime Global Cities Index.

The index, which tracks luxury house price growth in 35 cities, suggests that global housing markets have stabilised following a prolonged period of post-crisis volatility.

Knight Frank recorded steady house price growth of 3%-4% (year on year) for the eighth consecutive quarter in the first three months of 2016.

That follows big swings in upper-end house prices between 2009 and 2013, with annualised price growth varying from 9% in the first quarter of 2009 to 1% in the third quarter of 2012. Knight Frank’s head of residential research, Kate Everett-Allen, says the last time any city recorded a double-digit annual price decline was in the second quarter of 2015.

However, Everett-Allen notes that there is still a substantial gap in the performance between different cities and regions. In fact, the difference in price growth between Vancouver in Canada (26.3%) and Taipei, in Taiwan (-7.6%) — respectively the world’s best and worst performing housing markets in the first quarter — was 34% (read the table).

Vancouver’s outperformance is a result of a severe lack of supply, creating upward pressure on prices, says Everett-Allen. Other housing markets besides Vancouver that recorded double-digit growth in the first quarter are Shanghai (20.3%), Sydney (12.3%) and Melbourne (12.1%), which placed Australasia as the hottest world region in the year to March 2016, with prices rising 12% on average. Interestingly, Cape Town ranked as Knight Frank’s fifth-best-performing housing market, with growth of 6.9%.

Hong Kong, Moscow, Paris, Milan, Tokyo, Kuala Lumpur and Delhi joined Taipei at the bottom of the rankings, with house prices in these cities all taking a dip in the first quarter. Prices in prime central London increased by only 0.8% in the year to March, its lowest figure since October 2009, when a 3.2% decline was recorded following the collapse of Lehman Brothers. Everett-Allen ascribes London’s more muted performance to a series of tax changes and a preceding period of exceptional growth.