Vancouver occupied the top ranking for the fifth consecutive quarter in the latest Knight Frank Prime Global Cities Index which focuses on the top tier of mainstream property prices in markets around the world.
However the real estate firm noted that property price inflation in the Canadian city is expected to slow in light of a new tax for foreign buyers.
In Asia, Singapore lead the way – ranked in ninth position globally with a 7.9 percent year-on-year rise in prime residential property prices – a surprise to some perhaps? The three-month change in property prices at the top end of the market was a more modest 0.2 percent.
Kuala Lumpur was ranked in 32nd place of the 37 cities monitored by the firm. It recorded a year-on-year decline in prime residential property prices in the year ending June 2016, while the quarter-on-quarter decline stood at 0.7 percent, perhaps indicating a turnaround at the top of the residential property sector in the Malaysian capital.
With the inclusion of Toronto and San Francisco, the Prime Global Cities Index has expanded this quarter and now tracks prime residential prices across 37 cities worldwide.
Vancouver leads the rankings for the fifth consecutive quarter. Prime prices have increased by 36 percent in the year to June but July saw the surprise announcement that the British Colombia Government plans to introduce a new 15 percent tax for foreign buyers, reported earlier this month by Dot Property Group, effective from 2 August 2016.
Vancouver has joined an expanding club of cities (including Hong Kong, Singapore, Sydney, and Melbourne) where policymakers are taking steps to control the flow of foreign capital into their housing markets in order to stem demand and improve affordability for local residents.
Other top performers this quarter include Shanghai, Cape Town, Toronto, Melbourne and Sydney; all saw annual price growth reach double figures in the year to June.
The majority of Knight Frank’s top ten ranking cities have been on the receiving end of new cooling measures in the last 12 months. From interest rate hikes to fees for foreign buyers, higher land taxes, or new rules on the number of second homes that can be acquired, lowering price inflation is high up government agendas which suggest that a year from now the cities populating the top ten rankings could look very different.
Weakest performer
Hong Kong has eclipsed Taipei this quarter to take the title of weakest-performing residential market. Prime prices slipped 8 percent in the year to June as supply increased and concerns over the slowdown in the local economy persisted.
In London, prime prices were already softening prior to the European Union referendum in June as the city absorbed the fifth change to stamp duty rates in as many years.
Annual price growth has slowed from 8.3 percent to -0.6 percent over the five year period. Although uncertainty persists some clarity over the country’s leadership and the Bank of England’s decision to leave the base rate unchanged this month has delivered a hint of confidence in the U.K. economy.
Analysis by world region shows Australasia leads with prices rising by 11 percent on average followed by North America (10 percent).
Knight Frank noted that the global economy is still in a precarious state, lacking any real engine of growth. Low oil prices, deflationary concerns in the Eurozone, uncertainty surrounding the impact of the U.K.’s Brexit decision and weaker-than-forecast U.S. GDP figures represent just some of the challenges on the global economic landscape.
