‘Prime real estate prices moderate, but disparities widen’
Global prime residential real estate continued its steady climb in the first quarter of 2016, according to a new report by Knight Frank.
The index increased 3.6 percent, within the 3-4 percent window observed every quarter since late 2014. However, this is a result of a handful of booming markets rather than stable growth across the board, meaning the 3.6 percent number obscures the fall of some markets.
“In Hong Kong a raft of cooling measures aimed at improving affordability for local residents and deterring speculative investment have been introduced in recent years,” said Kate Everett-Allen, Partner, Residential Research, Knight Frank.
“A lack of supply, combined with strong domestic and foreign demand, has driven prices higher [in Vancouver and Australasia] in the last two years,” she said. “Both markets have seen the introduction of ‘cooling measures.’ Arguably this is having a greater impact on rates of growth in Australia than in Vancouver.”
For “Prime Global Cities Index Q1 2016,” prime residential real estate is defined as being within the top 5 percent of the wider market.
Vancouver, British Columbia, Canada continues to lead the way, with 26.3 percent in the 12 months ending March 2016. It is the fourth consecutive quarter it has had the largest 12-month growth, and it has the largest six-month percentage change and second largest three-month change as well.
Inventory remains in very low supply in the city. As a result, February’s increase from a 2 to 3 percent land transfer tax on purchases over $2 million Canadian, or about $1.55 million USD does not appear to be hurting the market.
Behind Vancouver is Shanghai, at 20.3 percent on the year and an index-leading 9.3 percent increase from December 2015 to March 2016. While Mainland China did well, with Beijing and Guangzhou also trending upward, Taipei and Hong Kong are at the bottom of the list.
Taipei has fallen 7.6 percent over the yearlong period, with Hong Kong dropping 6.4 percent. Only Moscow has had worse changes over the six- and three-month periods. However, for the third consecutive quarter, no city is coded as having a significant decrease.
Thanks to Sydney and Melbourne’s growth of 12.3 and 12.1 percent, respectively, Australasia is the strongest performing world region, helping to buoy the global index to 3.6 percent growth. This is in spite of a new fee for foreign buyers.