Knight Frank: Sydney set to see strongest growth in prime residential price

KUALA LUMPUR (Jan 14): Sydney is expected to see the strongest prime property price growth in 2016, rising by 10% year-on-year, said global property consultancy Knight Frank in its newly released Prime Cities Forecast Report on 10 global cities.

However, the pace of price growth in Sydney is expected to slow from 15% y-o-y in 2015 to 10% y-o-y in 2016. This is due to Australia’s economic slowdown, weaker stock market performance in recent months and the introduction of foreign investment fees.

Knight Frank Asia Pacific head of research Nicholas Holt forecasted that Sydney and Shanghai, along with other Tier-1 Chinese cities, will continue to see strong growth despite the economic slowdown, thanks to relatively limited prime supply.

Other than Sydney and Shanghai, Holt said many of the Asia Pacific prime residential markets will face existing and new headwinds in 2016.

“Three cities are expected to see a decline in prime property prices, namely Hong Kong (-5%), Singapore (-3.3%) and Paris (-3%), with Hong Kong overtaking Singapore as the weakest-performing luxury residential market in 2016,” said Holt.

Meanwhile, four cities are forecast to see stronger price growth, or a slower rate of decline, in 2016 - London (2%), Paris (-3%), Geneva (0%) and Singapore (-3.3%).

“Prime prices across all 10 cities are, on average, expected to have increased by approximately 3% in 2015, but average annual growth is forecast to slip to 1.7% in 2016. This confirms Knight Frank’s view that lower returns will become the norm in the short to medium term,” said Knight Frank International Residential Research partner Kate Everett-Allen.

She said the scale of the slowdown in China and the speed of further US interest rate rises will determine the performance of property markets across developed and emerging markets alike over the next 12 to 18 months.

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