Luxury homes: US cities outperforming those in Europe and AsiaKnight Frank’s Prime Global Cities Index shows luxury residential prices across the index’s 32 cities rose by 6.2% on average in the year to June 2014. Luxury homes in key US cities are now increasing in value at a faster rate than those in several European and Asian cities.
Of the 32 prime residential markets tracked by the index, 27 recorded positive annual price growth in the year to June 2014, up from 21 a year earlier.
Jakarta and Dublin stand out due to their stellar performances, ending the year to June 27.3% and 23.5% higher respectively. However, in both cases the rate of growth has slowed in the second quarter.
In Dublin’s case, the rate of growth slowed from 5.6% in the first quarter to 2.1% in the second. However, given Ireland’s improving economic landscape and the expiry of Ireland’s capital gains tax incentive at the end of 2014, we expect prime prices will continue their upward trajectory in the second half of the year.
We noted last quarter the improving performance of luxury homes in North America. This trend has continued in the second quarter with New York, Los Angeles, Miami and San Francisco all recording double-digit annual growth in the 12 months to June, placing them all in the top 10 rankings.
With the gradual withdrawal of stimulus measures in the US and the UK, the prospect of rising interest rates and the continual enforcement of cooling measures across much of Asia, it would be logical to assume the index’s performance would be weakening.
However, the index’s annual increase of 6.2% in the year to June is above the long-run average of 4.6% recorded since Lehman’s collapse in the third quarter of 2008, underlining the extent to which prime property has become a favoured asset class globally.