Luxury property prices increased just 1.5% across the globe in the 12 months to June, according to a recent report – but it’s the strongest rate of growth since 2022.
A shift to rising interest rates (Australia has left its rates on hold at 4.1%) has taken a toll on housing markets across the globe, but as the cycle nears its end, Knight Frank reports positive growth across the luxury property segment.
Even the world’s worst-hit markets, like Auckland and Sweden, have seen a turnaround, with more than 50% of all markets seeing prices increase over the last three months, and nearly 60% over the last 12 months
“Global housing markets are still under pressure from the shift to higher interest rates,” Knight Frank’s global head of research, Liam Bailey, says. “But… Prices are being supported by: strong underlying demand, weak supply following disruption to new-build projects during the pandemic and an ongoing return of workers to cities.”
Dubai recorded the strongest growth, with luxury house prices surging 48.8% in the last 12 months. Prices in the Emirate have soared by 225% since reaching a pandemic low in Q3, 2020. Tokyo followed with 26.2% growth across the 12 months to June and Manila with 19.9% growth.
“As uncertainty over the direction of inflation appears to have reduced in recent months, price adjustments in many markets are likely to be less pronounces than was expected even three months ago,” Bailey says.
Top 10 cities where luxury house prices increased
- Dubai (48.8%)
- Tokyo (26.2%)
- Manila (19.9%)
- Miami (7.5%)
- Shanghai (6.7%)
- Mumbai (5.2%)
- Madrid (5.1%)
- Nairobi (4.7%)
- Lisbon (4.7%)
- Bangkok (4.6%)
Top 10 cities where luxury house prices decreased
- Wellington (-15.1%)
- Frankfurt (-12.9%)
- San Francisco (-11.1%)
- Auckland (-9.9%)
- Shenzhen (-5.9%)
- Christchurch (-5.0%)
- Vancouver (-5.0%)
- Seoul (-4.5%)
- New York (-3.9%)
- Los Angeles (-2.5%)
Australian luxury house prices
The Australian housing market initially experienced robust growth during the pandemic, but a sharp downturn followed in the second-half of 2022. Now, with demand outweighing weakened supply, Knight Frank has placed three Australian cities on the list – all within the top 20.
Perth comes in 13th, with luxury house prices increased 4% in the last 12 months and 3.6% in the last 3 months alone. Melbourne and Sydney trail at 17th and 18th respectively, with house prices increased 2.1% and 1.7% respectively across the last 12 months. In the last three months, Melbourne prices have actually dipped 1.1%, and increased just 0.4% in Sydney.
According to CoreLogic, the combined value of Australian housing rebounded to $10 trillion at the end of August – the first time the total estimated value hit double digits since June 2022. The median home value across Australia topped $732,886 at the end of August, and the stock of housing increased to around 11 million properties.
The recovery in home values began in March 2023, and has wiped out around half of the preceding downturn between April 2022 and February 2023 (which saw national home values fall by 9.1%), CoreLogic stated.
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