Growth of global prime residential prices moderates to 7.5% in 3Q2022: Knight Frank

SINGAPORE (EDGEPROP) - According to Knight Frank’s Prime Global Cities Index, global prime residential prices grew by 7.5% in 3Q2022, compared to the 10% increase clocked in 1Q2022.

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The Prime Global Cities Index is a valuation-based index that tracks the movement of prime residential prices, defined as the top 5% of the housing market in value terms, across 45 cities worldwide. It is based on Knight Frank’s global research network and tracks prices in local currencies.

Last quarter’s price growth was still above the index’s five-year average of 4.4%, and the number of cities that registered y-o-y price declines shifted from six in 2Q2022 to seven in 3Q2022.

Victoria Garrett, head of residential, Knight Frank Asia-Pacific, says that 84% of cities tracked still register prime price growth annually. She adds: “The markets that registered some of the strongest price rises during the pandemic are well represented amongst this group: San Francisco, Toronto, Wellington, Stockholm, Vancouver, Los Angeles, Seoul, and some Chinese Mainland cities”.

Last quarter, prime central London saw prices increase by 2.7% yearly. “Prices are now rising at their fastest rate since Q1 2015. Resilient labour markets, a lack of supply and well-capitalised lenders will support prime prices in most markets into 2023,” says Garrett.

Overall, Dubai is the city with the fastest-growing prime residential prices this year, climbing 88.8% over the first nine months of 2022. “Prime residential prices in the Asia Pacific continued to cool in the third quarter, with the region’s cities making up 11 of the 19 markets globally that recorded a decline between June and September 2022, a stark reversal from annualised figures which had just four markets in the red,” says Christine Li, head of research, Knight Frank Asia-Pacific.

However, a handful of Asia Pacific markets are holding steady such as Tokyo and Singapore, where financing rates remain accommodative, says Li. She adds that some price declines were observed to have moderated in the emerging markets in Southeast Asia.

“The continued supply imbalance and reopening of travel and immigration will be supportive of price levels. However, with prices falling sway to monetary policy, conditions will remain uneven in the short term, and the prime residential market in the region is now a buyer’s market,” says Li.

The transition from a sustained period of low lending rates will lead to some squeeze, particularly among highly leveraged prime residential landlords. This could result in more available resale supply in some cities, adds Knight Frank.