According to the current Knight Frank Prime Residential Prices Index, premium residential property prices grew 6.2 percent on average in the year to June 2014 across the worldwide index's 32 cities. The value of luxury properties in key US cities is now expanding at a quicker rate than in some European and Asian locations. In the year to June 2014, 27 of the 32 top residential markets monitored by the index saw positive yearly price rise, up from 21 a year earlier. For sale
North America saw a 14.5 percent increase in average annual price change in 2014.
The Middle East is up 7%.
The global average has increased by 6.2 percent.
The Asia-Pacific region is up 5.3 percent.
Europe has gained 3.5 percent.
Africa has increased by 3.2 percent.
Jakarta and Dublin stand out for their outstanding results, with 27.3 percent and 23.5 percent increases in the year to June, respectively. In all situations, though, the rate of increase dropped in the second quarter.
The rate of growth in Dublin has fallen from 5.6 percent in the first quarter to 2.1 percent in the second. Given Ireland's strengthening economic outlook and the expiration of Ireland's capital gains tax incentive at the end of 2014, we expect prime prices to continue to rise in the second half of the year.
In the year to June, premium prices in Dubai increased by 6.3 percent, down from 11.7 percent the previous quarter. At the end of 2013, the mortgage cap and the increase of transfer costs had a greater impact on buyer activity than expected. According to new study by Knight Frank, mortgage financing accounts for 25 percent to 35 percent of all purchases in the Emirate, which is higher than previously anticipated.
However, with new supply at the prime level expected to be limited in the next 18 months, we predict prices to rise in the second half of 2014.
Last quarter, Kate Everett-Allen, head of Knight Frank's International Residential Research, observed the rising performance of luxury residences in North America. "This trend continued in the second quarter, with double-digit yearly price rise in New York, Los Angeles, Miami, and San Francisco, putting them all in the top ten rankings," Ms. Everett-Allen added.
With the gradual removal of stimulus measures in the United States and the United Kingdom, the potential of rising interest rates, and the continued implementation of cooling measures across most of Asia, it would be reasonable to expect the index's performance to deteriorate.
However, the index's annual increase of 6.2 percent in the year to June was higher than the long-run average of 4.6 percent since Lehman Brothers' collapse in the third quarter of 2008, demonstrating how premium property has become a popular asset class around the world.