PETALING JAYA (Feb 20): Price growth in key Asian cities have fallen on regulatory changes and cooling measures, according to international property consultancy Knight Frank’s The Global Residential Cities Index for 3Q17.

According to a report on the index — which tracks 150 cities worldwide — only three Asian cities made it to the top 10 rankings during the period, with Hong Kong at the sixth highest.

“Despite having some of the highest growth rates over the last five years, a number of key Asian residential city markets continued to slow,” said Knight Frank Asia Pacific head of research Nicholas Holt.

"On the back of continued cooling measures, Tier-1 Chinese cities saw price growth slow, with Shanghai most notably slipping into negative territory,” he said.

“In India, cities such as Mumbai, Ahmedabad and Bengaluru see their yearly growths narrow down to single digits from previous quarter’s double digits, as the impact of demonetisation and the new real estate regulator take effect,” he added.

Kochi is the top-performing Indian city, ranking 12th overall ahead of mainland Chinese cities such as Changsha, Chongqing and Shenyang which still posted double-digit growth.

“Analysis of real house price growth — when inflation is stripped out — shows Asian cities were the strongest performers over the five-year period,” the report noted.

Shenzhen recorded the highest growth in real terms, posting a 116% appreciation.

Meanwhile, Middle Eastern cities have displayed the highest rise in nominal house price growth over a five-year-period, averaging 58%, with Istanbul leading the group at 129%.

According to Knight Frank, the Global Residential Cities Index has registered a decline in its annual growth rate for three subsequent quarters.

Amsterdam (13.8%) and Utrecht (11.5%) — both in the Netherlands — were some of the quarter’s biggest gainers on an annual basis, but the consultancy pointed out that their appreciation is magnified by the declining growths of other cities, especially those in India and China.

According to the index, house prices increased by an average of 4.7% in 3Q17, slipping from 5.8% in the previous quarter.

Iceland’s capital Reykjavik (21.3%) took the top spot in the rankings during 3Q17, and is notably the only city where annual house price growth exceeded 20%.

It replaces Toronto in Canada which fell to the fourth place as the new foreign buyer tax dampened market sentiment, reducing its annual price growth rate to 18% from 29%.

In Europe, almost half of all cities saw mainstream market housing values declining from a year ago, in contrast with the performance of the luxury homes market.

Unlike the luxury end of the market, mainstream prices in Europe remain weak, accounting for almost half of the cities registering an annual decline.

“This quarter, 46% of all cities registering a fall in prices year-on-year are located within Europe, with seven located in Italy.

“The number of cities registering declining growth rates has fallen from 27 to 26 with Darwin, Valencia and Abu Dhabi taking the bottom spots,” said the report.

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