Luxury house prices in key cities grow in second quarter

KUALA LUMPUR: Prime property prices have increased on an average of 2.4% in the second quarter of 2013, according to the latest Knight Frank Prime Global Cities Index.

The price growth is led by Jakarta, which recorded a 27.2% increase — the strongest growth for the third consecutive quarter. Prime prices in 28 cities tracked by the index, have risen by 5.6% in the year to June, showing a marked improvement from the 0.4% drop recorded in the first three months of the year.

Although European cities like Rome, Paris and Madrid remain the weakest, with an annual fall of 0.9%, their prime property prices are up 3.4% from the previous year. Madrid was the weakest-performing prime residential market in the last two months, declining by 11.9%.

Luxury prices in Dubai have increased by 21.6% in the year to June, while prime prices in Singapore rose by 5.5% in the second quarter, having been marginally-impacted by the seven rounds of cooling measures implemented by its government.

In Tokyo, homes above ¥100 million (RM3.4 million) have benefited from the Bank of Japan's aggressive monetary easing policies, spurring the jump in prices by 21% in the second quarter. This was due to domestic buyers taking advantage of the Nikkei’s surge and foreign buyers from Singapore, Hong Kong and Taiwan taking advantage of the weak yen.

According to Kate Everett-Allen of Knight Frank’s international residential research, policymakers in Asia and Europe are polarised in their approaches.

"Asia's governments are stepping up efforts to cool price growth by heightening the restrictions on foreign ownership, as highlighted in Knight Frank's Asia-Pacific Residential Review," she said. "In contrast, many European economies — particularly the more debt-stricken ones — such as Greece, Spain and Portugal, are taking the opposite tack and introducing Golden Visas and tax incentives to attract non-EU investors, to help stimulate their markets."

Everett-Allen said the range between the top and bottom ranking cities shrank to only 39%, from 56% in the last quarter. The proportion of cities recording positive price growth also increased to 71% from 52% last year.

The top 10 spots on the index are Jakarta, Dubai, Shanghai, St Petersburg, Tel Aviv, New York, Tokyo, Bangkok, Beijing and San Francisco, in that order.

The Knight Frank Prime Global Cities Index, established in 2011, monitors and compares the performance of prime sales markets in key global cities. The index is compiled on a quarterly basis.

This article first appeared in The Edge Financial Daily, on August 30, 2013.

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