Euro-top

A proliferation of property market regulations, the rising cost of finance, uncertainty surrounding Brexit, and in some markets, a high volume of new prime supply, is weighing on prime prices across the world.

However, key European cities are bucking the trend for lower growth, and are leading the rankings with prices expected to rise by 6% in Madrid, Berlin and Paris in 2019, according to the global forecast from international real estate firm Knight Frank.

Prices are also forecast to rise by 5% in Miami, 3% in Vancouver, 2% in Los Angeles and Sydney, 1% in Geneva, Melbourne and London and remain flat in New York and Singapore.

Meanwhile, in Hong Kong, which has some of the highest property prices in the world and seen some of the highest growth, Knight Frank is forecasting that prices could drop by 10% while Mumbai could see prices fall by 5% and Dubai a price reduction of 2.4%.

‘Of the 15 cities monitored, the key European cities of Madrid, Berlin and Paris, lead our forecast for 2019 with growth of 6%. Still positive, but marginally down on 2018, the normalisation of monetary policy, weaker economic growth and a fragile political landscape post-Brexit will influence demand, but the relative value of these cities remains a key driver,’ said Kate Everett-Allen, partner in international residential research at Knight Frank commented.

The report also reveals that the top performing cities over the last 10 years are led by Vancouver where prices have risen by 101.5% while in Sydney prices have risen by 60% and New York is the bottom of the ranking, recording price growth of 15.2% over the 10 year period.

It points out that a number of key events in 2019 are likely to impact prime residential markets including the UK leaving the European Union on 29 March 2019 and a new developer tax on unsold inventory in Mumbai.

In Hong Kong stamp duty is likely to remain unchanged but loan to value ratios could be relaxed and the full implications of State and Local Tax deductions (SALT) in the US will be understood in April 2019 as tax returns are filed.

Other trends that are noteworthy include more buyers from the United States buying abroad and in established western markets, non-traditional real estate sectors such as student accommodation, retirement living and Build to Rent will outperform the wider market.

It also predicts that more cities will enter the ultra-prime market. San Francisco, Chicago, Dallas, Beijing and Shanghai are expected to join the select club of cities where three or more sales above US$25 million take place annually.