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Global property investment shifts to North America and Australia

Globally, house prices are not moving much, but key destinations are attracting big property investment and registering double-digit price rises. Continued uncertainty over the Chinese economy means overseas property markets in North America and Australia are likely to remain safe bets in the near future.


The latest Knight Frank Prime Global Cities Index paints a sombre picture globally but within a generally sluggish market there are very bright spots. Overall, the Index for Q3 this year rose by just 1.9 per cent, perhaps highlighting the uncertainty still prevalent in many large economies. Property markets in 73 per cent of the 34 cities included in the Index showed positive growth, considerably below the 91 per cent registered two years ago.


Year-on-year Best Performers

But these general figures for the Index hide much better performers, particularly those in North America and Australia. In year-on-year terms, Vancouver in Canada stands out well ahead of the rest. In this waterfront city, prices rose by a massive 20.4 per cent in year to September. Knight Frank attributes this to the acute lack of supply of property in Vancouver.


In second place was Sydney where the property market saw an increase of 13.7 per cent over the year. Several factors lie behind the sharp increase in Sydney property prices including the weak Australian dollar and the city’s strong economy. Shanghai was another good performer with a price hike of 10.7 per cent, driven mostly by strict fiscal demands prompting a surge in interest in property.


Semester Stars

When it comes to performances over the last six months, Vancouver property yet again stands at the top with a price rise of 10.5 per cent since March. One of Europe’s smallest nations is, however, close behind. Prices for property in Monaco rose by 10.3 per cent in the six months to September making the principality easily the best performer in Europe as well as the second best globally. Sydney with an increase of 9.6 per cent closed the top three rankings.


Quarterly Highlights

The focus shifts slightly in the quarter-on-quarter ratings. Here, Vancouver drops from first place to second in favour of Moscow. In the Russian capital, property prices went up by 6.1 per cent in the three months to September, a considerable improvement on its previous performance. Moscow property dropped by 3.8 per cent over the year.


Vancouver takes second place with a quarterly increase of 5.2 per cent, followed by Monaco with 5 per cent. Q3 this year generally marked an improvement for many of the cities included in the Index with several such as Paris registering positive figures after decreases.


At the Bottom

Europe dominates the bottom of the table with the property markets in several capitals showing poor performances. Switzerland’s financial centre registered the worst results – property in Zurich plummeted by 5.1 per cent in the year to September. Geneva fared little better with a 3.7 per cent drop and Paris property went down by 2.1 per cent. Singapore, however, was the worst performer. Between September 2014 and September this year, prices for property here went down by 7.9 per cent. Property in Singapore did, however, recover somewhat in the last quarter with a 2.2 per cent rise.


The Future

Australia and North America dominate the Q3 Index with average annual price increases of 11.6 per cent and 8.5 per cent respectively. Europe managed positive figures – 0.8 per cent – but far behind those seen in other continents, although in certain locations such as Monaco and Madrid property performed well.


Despite impressive price rises in some locations, Knight Frank points to continued uncertainty in the global market, caused particularly by the Chinese economy. However, high-net-worth individuals will still pour money into global property investments and Knight Frank pinpoints those from China. “Wealth from China will continue to flow into overseas property markets with the UK, US, Canada and Australia being key target destinations,” the Index concludes.


Source: Knight Frank

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