Frank_Knight
Where do Australia’s prime property markets rank? Image – Canva
  • Knight Frank has released their Prime Global Cities Index for Q1 2021
  • Prime residential prices are rising at their fastest rate since the end of 2017, worldwide
  • Chinese cities accounted for the top three spots, each with over 16% price growth

Prime residential prices are soaring on a global scale., according to Knight Frank’s Prime Global Cities Index.

The index recorded an average 4.6% annual increase in the first quarter of this year. This means prime residential prices are rising at the fastest rate since the fourth quarter of 2017.

The desirable and expensive property in a given location is referred to as ‘prime property’. As a general rule, these are the most expensive 5% of each market.

Prime_Property_Index_Frank_Knight
Source – Knight Frank

Eleven cities reported double-digit price growth, up from a single city at the same time last year.

Australia seems to rank right in the middle of the global pack. Perth has seen the biggest increases in its top-end with +4.1% annual price growth, followed by Brisbane (+3.8%), the Gold Coast (+3.5%), Sydney (+2%) and Melbourne (+0.4%).

Why is the demand skyrocketing for luxury properties all over the world? Knight Frank attributes the take-off in demand to the uber-low mortgage rates, the incredibly tight market stock levels and the post-lockdown desire for spacious properties.

Chinese cities Shenzhen, Shanghai and Guangzhou have taken out the podium positions in this quarter’s index. Knight Frank cites an influx of government investment in the Greater Bay Area of China and an improved economic sentiment as the source of the country’s surge.

Competition is tight in the top five spots, with Vancouver and Seoul both recording more than 15% growth. Knight Frank notes that “…successive cooling measures have been deployed to reduce speculative activity in recent years, but local appetite for
homebuying remains undeterred.”

The Frank Knight Prime Global Cities Index’s Top 30 Cities

Ranked by annual % change in the year until Q1, 2021

  1. Shenzhen, Asia 18.9%
  2. Shanghai, Asia 16.3%
  3. Guangzhou, Asia 16.2%
  4. Vancouver, North America 15.2%
  5. Seoul, Asia 14.8%
  6. St. Petersburg, Russia & CIS 13.4%
  7. Los Angeles, North America 12.6%
  8. Moscow, Russia & CIS 12.4%
  9. Taipei, Asia 12.2%
  10. Miami, North America 10.2%
  11. Toronto, North America 10.1%
  12. Geneva, Europe 9.2% 2.9%
  13. Manila, Asia 7.9%
  14. Stockholm, Europe 7. 7%
  15. San Francisco, North America 7. 5 %
  16. Auckland, Australasia 7. 5 %
  17. Zurich, Europe 7. 2 %
  18. Edinburgh, Europe 6.8%
  19. Beijing, Asia 6.4% 4.3%
  20. Perth, Australasia 4.1% (0.2% – three month change) 
  21. Brisbane, Australasia 3.8% (1.6% – three month change)
  22. Gold Coast, Australasia 3.5% (1.2% – three month change)
  23. Singapore, Asia 2.5%
  24. Lisbon, Europe 2.4%
  25. Sydney, Australasia 1.9% (2.0% – three month change)
  26. Frankfurt, Europe 0.8%
  27. Melbourne, Australasia 0.4% (0.7% – three month change)
  28. Vienna, Europe 0.4%
  29. Bucharest, Europe 0.4%
  30. Dublin, Europe 0.3%

Not everywhere is experiencing these price increases.

Interestingly, some of the world’s biggest metropolises are seeing prices ease, with negative growth in the prime property market. New York saw the biggest drop, down 6%. Dubai is next -4%, followed by London (-4%), Paris (-4%) and Hong Kong (-3%).

Frank_Knight_Prime_Index
Source – Knight Frank

The weak prime property market in these cities can be put to a combination of factors. Knight Frank suggests extensive and stringent lockdown measures, a backlog of supply, higher taxes and policy constraints are the sources of negative growth.

Not all hope is lost for the prime property market in these weaker cities as in most cases a return to growth is expected by the end of the year as consumer confidence recovers, travel bans ease and cross border transactions resume.

The Prime Global Cities Index utilises worldwide data across 45+ cities. It works as a valuation-based index and tracks the fluctuations of prime residential prices in each city’s local currency.

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