_Seoul leads luxury price growth rankings
The Prime Global Cities Index which tracks the movement in luxury prices across 43 cities increased 4.8% in the year to March 2018, marginally lower than the 4.9% recorded in December 2017.
As borrowing costs start to increase across some of the world’s major economies we expect prime price growth to moderate further. Already, the gap between the strongest and weakest-performing city has slipped from 39% to 33% in the last three months and the number of cities that saw their rate of annual growth decline has risen from 16 to 23 over the same three-month period.
Seoul has taken the lead from Guangzhou this quarter, registering 24.7% annual growth. Across a large part of the city new macro prudential measures, including new taxes for owners of multiple properties and tighter lending restrictions, are cooling growth, but the prime area of Gangnam is still seeing strong speculative activity.
Cape Town continues to occupy second position in the rankings with prices ending the year to March 19.3% higher. Although the wider city market is cooling, a lack of supply in the prime areas we track in Camps Bay, Bantry Bay and the Atlantic Seaboard is pushing prices higher.
Cities in Asia Pacific now account for five of the top ten rankings. Key European cities are also well-represented at the top of the table. Edinburgh and Zurich join Berlin, Paris and Madrid in the top 15 this quarter.
"Prime residential prices in Edinburgh accelerated 7.7% in the 12 months to March 2018. A demand-supply imbalance is underpinning values with sales above £500,000 increasing 16% in 2017. "
Sydney (8.7%) and Melbourne (8.3%), are following a similar narrative with supply constraints supporting prime prices. Both cities continue to outpace their Australian counterparts, Brisbane (3.6%) and Perth (2.8%) which we are tracking for the first time this quarter.
The world’s top tier cities – London, New York and Hong Kong – all saw annual price growth dip marginally compared with last quarter. In London, while the market remains sensitive to political events there is a sense of (relative) stability being restored.
In New York the weaker dollar is attracting foreign interest and with Wall Street bonuses back to pre-crisis levels we expect luxury demand to strengthen.
In Hong Kong prime prices accelerated 6.9% although mainstream prices continue to outperform. Despite China’s capital controls there remains a strong appetite for USD-pegged assets from the Chinese Mainland.
At the bottom of the table, Moscow no longer holds the title of weakest-performing market. Instead, Stockholm (-8.4%), Taipei (-7.4%) and St Petersburg (-4.0%) registered the largest declines over the 12-month period.
For more information please contact Kate Everett-Allen