Of the 32 prime residential markets tracked by Knight Frank’s Prime Global Cities Index, some 27 recorded positive annual price growth in the year to June 2014, up from 21 a year earlier.
The index report also shows that luxury homes in key US cities are now increasing in value at a faster rate than those in several European and Asian cities.
Even although Jakarta and Dublin are the top performers, ending the year to June 27.3% and 23.5% higher respectively, in both cases the rate of growth has slowed in the second quarter.
In Dublin’s case, the rate of growth slowed from 5.6% in the first quarter to 2.1% in the second. However, given Ireland’s improving economic landscape and the expiry of Ireland’s capital gains tax incentive at the end of 2014, and Knight Frank expects prime prices will continue their upward trajectory in the second half of the year.
Dubai has also seen strong growth but the data shows that annual price growth slipped from 11.7% in the first quarter to 6.3% in the second quarter. The emirate’s mortgage cap and doubling of transfer fees at the end of 2013 has influenced buyer activity more than forecast, it is suggested.
Indeed, new research by Knight Frank revealed 25% to 35% of purchases are mortgage financed in the Emirate, more than previously thought. However, with new supply at the prime level looking limited over the next 18 months, the firm expects prices to strengthen in the remainder of 2014.
The improving performance of luxury homes in North America which was reported in the first quarter index has continued in the second quarter with New York, Los Angeles, Miami and San Francisco all recording double digit annual growth in the 12 months to June, placing them all in the top 10 rankings.
A number of key European markets are at the bottom of the index table. Rome has seen values unchanged in the 12 months to June, Zurich has seen prices fall by 0.3%, Paris by 2.5% and Geneva a fall of 4.3%.
Some Asian markets have also experienced a poor 12 months. In Singapore prime prices are down annually by 7.7%, in Hong Kong they are down by 2.9%, while Tokyo has seen prices rise by just 0.2%, Mumbai a rise of 0.8% and Delhi a rise of 1.8%.
The index report says that with the gradual withdrawal of stimulus measures in the US and the UK, the prospect of rising interest rates and the continual enforcement of cooling measures across much of Asia, it would be logical to assume the index’s performance would be weakening.
‘However, the index’s annual increase of 6.2% in the year to June is above the long run average of 4.6% recorded since Lehman’s collapse in the third quarter of 2008, underlining the extent to which prime property has become a favoured asset class globally,’ said Kate Everett-Allen of Knight Frank’s international research team.
