Prime property prices continued to rise in Q3 according to the latest report from Knight Frank. The survey revealed that 62% of locations in the Prime Global Cities Index saw prices increase over the year. Several cities registered hikes of well over 5% as investors turn to luxury property as a safe haven.
North America takes top position
The Index tracks prime property prices in over 40 cities worldwide and in Q3 this year, it saw an overall increase of 1.6%. The best performing region over the year was North America with three cities in the top rankings. Toronto led the list with an 8.4% increase with Vancouver and Los Angeles close behind.
Frank Knight noted that Vancouver’s figure was a surprise and showed that prime property prices in the city was proving resilient. Vancouver introduced a 20% foreign buyer tax recently in an attempt to slow down price hikes. However, sales in the city soared by 56% in the year to September.
Movers and shakers in Q3
But Auckland took top place overall in the Index. New Zealand’s largest city saw a 12.9% increase in property over the year.
Some Asian also showed resilience when it comes to property prices. In the Philippines, Manila came in second place with a 10.2% rise. Prime property prices also performed well in two Chinese cities – they went up by 8.9% in Shenzhen and by 6% in Shanghai.
The Index points out that demand is “mostly domestic” given the current travel restrictions. It also emphasises that the best-performing cities were those in “traditional safe havens”. The Swiss cities of Zurich and Geneva both saw high increases (7.3% and 6.1% respectively). And investors were also drawn to economies in recovery mode after the pandemic such as the South Korean and Chinese.
Lacklustre prime property prices
At the opposite end of the scale, several cities moved into negative territory with some experiencing significant drops in house prices. Singapore with a 6.1% decrease saw the biggest fall, followed by Bangkok (-6%) and Hong Kong (-5.4%).
Even traditional hotspots for luxury property did not fare well in the year to Q3. This was the case with London, for example, where prices for prime real estate fell by 4.5%.
In quarterly terms, house price decreases were negligible in most cities. The biggest decrease took place in Dubai where property values fell by 1.7%. Madrid stood in second place with a drop of 1.6%. Across the Atlantic, prices in New York went down by 1.3% between June and September.
Prime property safe haven
The report cites the factors currently creating uncertainty across the globe. First and foremost is the covid-19 pandemic, still very active in many countries. The US election result fallout and the undecided Brexit deal add further volatility to the world economy.
As a result, investors are favouring luxury property as a safeguard for their money. As the Knight Frank report says, “property’s credentials as a safe and tangible asset class are rising to the fore”.
(Source: Knight Frank)