Global prime property index falls for the first time since 2009
The global index of prime real estate drops for the first time since 2009, with some cities seeing value fall 27.2% over the past year
- Wellington has seen prices of prime real estate fall dramatically over the past 12 months
- Dubai is the big winner with luxury market up 44.2%
- Knight Frank says slowdown is caused by higher global interest rates
Luxury real estate prices worldwide have fallen for the first time since 2009, according to extensive data from Knight Frank.
The broker’s Prime Global Cities Index, which tracks prices in 46 areas around the world, fell 0.4 percent in the 12 months to the end of March 2023.
Between 2010 and 2020, the growth of this index was around 5 percent. Since then, increases have been closer to double digits, peaking at 10.1 percent in the last three months of 2021.
But a growth slowdown has been “predominantly” driven by higher interest rates due to a tightening of global monetary policy, Knight Frank says.
Wellington woe: Luxury property prices have crashed over the last 12 months, according to Knight Frank – along with Auckland and Christchurch
Annual prices are now falling in more than a third of the cities monitored. And while two-thirds are still growing in value, the big drop in prices in some areas has pulled the index negative.
Only eight cities posted plus 5 percent growth for prime real estate. Meanwhile, the New Zealand prime market has witnessed a massive slump.
Wellington saw prices fall by 27 per cent over the past 12 months, Auckland by 17 per cent and Christchurch by 15.3 per cent – the three worst-performing cities in the world.
In Toronto, the top values fell by 13.4 percent, in Frankfurt by 11.1 percent and in Stockholm by 11 percent.
This, says Knight Frank, “reflects weakness in their broader national markets” in these spots.
The Prime Global Cities Index has entered negative territory for the first time in 14 years
Winners and losers: At the top is Dubai, where the luxury market has boomed over the past year
London was 29th in the list, with growth of 0.5 percent over the past year. Edinburgh ranks 7th with a 5.1 percent increase in primes.
The biggest winner over the past 12 months has been Dubai, with a 44.2 percent increase in value in just one year in the United Arab Emirates city.
Prices in Dubai have indeed skyrocketed since the pandemic, rising 149 percent since March 2020. Knight Frank says it ‘reflects a market undergoing profound structural changes’.
Dubai is the clear outlier. Second in the list is Miami, with an 11 percent growth in the luxury real estate market.
Zurich, Berlin and Singapore are the top five, with growth of 9.4, 5.7 and 5.5 percent respectively.
Dream of Dubai: Values are up 149 percent since the pandemic – far more than any other city tracked by Knight Frank
A spokesperson for Knight Frank said: “While the Federal Reserve and other central banks are approaching peak rates, it is likely that even major housing markets will experience continued downward pressure on prices in the coming quarters.
That said, it’s unlikely we’ll see a correction comparable in magnitude to that experienced during the financial crisis, when this index fell 8.2 percent from peak to trough in 2009.
“There are early signs that some markets are seeing improvements, 46 percent of markets saw quarterly price declines in the second half of 2022, but only 28 percent in the first quarter of this year, the lowest number since the first quarter of 2021. ‘