Knight Frank: Luxury house prices hampered by global economic uncertainty

PETALING JAYA (Nov 3): Luxury homes in cities round the globe saw a slowdown in price growth in 3Q2016 as new taxes, elections, referendums and economic jitters took hold, according to international real estate firm Knight Frank LLP.

In its Prime Global Cities Index for 3Q2016, Knight Frank noted that despite the 3.8% growth in the year to September 2016, 18 of 37 cities in the index saw their price growth rate decrease over the same period.

“Vancouver (pictured) continues to lead the annual rankings but looks set to surrender the top spot next quarter having recorded quarterly price growth of only 1.5% in the three months to September.

“A new 15% tax for foreign buyers and talk of a further tax on vacant homes in 2017 are slowing sales. Elections and referendums tend to provoke a wait-and-see approach in the minds of buyers evidenced in the run-up to the UK’s Brexit vote in June and the forthcoming US Presidential election,” said Knight Frank’s international residential research partner Kate Everett-Allen in a statement.

Prime prices in London also declined by 2.1% in the same period as stamp duty remains a decidedly bigger influence on the prime London market than the European Union referendum and in some instances the uncertainty surrounding Brexit has been a catalyst for overdue price reductions.

In Manhattan, New York, the average price of an apartment in the city has exceeded the US$2 million (RM8.37 million) threshold earlier in 2016 and although sales activity has moderated, luxury prices in New York are proving resilient.

Meanwhile, Chinese cities such as Shanghai, Guangzhou and Beijing have grown 23.4%, 14.3% and 7.1% respectively.

“However, local governments have enacted a range of measures this month to cool demand suggesting a more muted outlook.

“Hong Kong, where luxury residential prices are 4.7% below their 2Q2015 peak, has halted its decline with prices rising by 4.1% in the three months to September. Strong demand has led to a recent upturn in sales,” said Knight Frank.

Zooming into Kuala Lumpur, the city’s price growth rate has decreased 2.5% in the year to September.

“Currency movements will be the single largest determinant of international demand in the world’s top cities over the next six to 12 months.

“Investors are increasingly looking to the US as their safe haven of choices as the world economy stutters, but a strong dollar will have repercussions globally,” concluded Knight Frank.