Investors are likely to land on a short, if frustrating, answer: It's complicated, because prime property markets across the globe are performing in the midst of broad economic uncertainty.
According to Knight Frank's Prime Global Cities Index for Q 2 2022, the growth for prime residential prices in 45 global cities slowed from a peak of 10% in the first quarter of 2022 to 7.5% in the second quarter. Prime is defined as the top 5% highest priced property in any given market. Quality of Life draws Luxury Buyers to Europe.
A number of cities are bucking the trend, and seeing dramatic price increases as a result of slowing growth. The cities with the most significant year-over-year second quarter prices were Dubai 64.8% Miami 37.3% Los Angeles 23.4% and San Francisco 22.2% One surprising factor was the extent to which prime central London and New York are out of kilter with other global cities, Knight Frank head of international research Kate Everett-Allen told Mansion Global. Other markets are seeing the rate of prime price growth slow while London and New York are recording their strongest growth rates for seven and eight years, respectively. New York saw a year-over-year price growth of 7.3% in the second quarter, and London prices grew by 2.5% during the same period. European cities saw stronger than expected price performance, according to Everett-Allen, as well as a 5.6% annual price growth in the year to June 2022 in the year to June 2022, according to Ms. Everett-Allen. In the second quarter, Berlin, Dublin and Edinburgh saw some of the strongest annual growth, with price growth of 12.6%, 10.2% and 11.2%.
In 19 out of 45 cities, price growth slowed, and Knight Frank wrote in their report, rising mortgage rates and a weaker global outlook are cooling some of the ebullience of the last two years, but the slowdown will be felt most in lower price brackets and domestic-driven markets. Toronto, Stockholm and the New Zealand cities of Auckland and Wellington have had some of the largest declines in annual price growth. Prices in Auckland are averaging 1% price growth in the year to June 2022, down from 17.6% in March, Ms. Everett-Allen said.
The report said that only six cities saw actual price declines in the second quarter — Manila, Philippines; Kuala Lumpur; Malaysia, Jakarta, Indonesia; Guangzhou, China; Frankfurt, Germany and Wellington — the same number as in the first quarter.