There’s been a significant slow down in luxury home price growth

by Steve Randall13 Mar 2019

The growth of prices in the luxury housing market has shown a significant slowdown according to a global survey by Savills.

The real estate firm’s world cities prime residential index saw the smallest annual increase since the global financial crisis, just 2.3% in 2018 compared to 3.3% in 2017.

Growth slowed to 0.4% in second half of the year, suggesting a high plateau

“Prime residential real estate values are settling into a pattern of slower, steadier price growth and we do not expect to see a repeat of the double-digit annual price growth seen pre GFC,” said Sophie Chick, director, Savills world research.

Rental growth also slowed across the index, leaving average world city yields for prime residential assets at a 10-year low of just 3.2%.

“Back in 2007, spiralling global wealth generation and competition for trophy assets in established and emerging world cities, saw our prime sales index rise by 15.4% in the year,” added Ms. Chick. “But while growth is now expected to slow, we expect the search for security of tenure and title in cities where the world’s high net worth individuals wish to live and do business, to underpin values.”

Where the best gains are
Berlin was the biggest riser in the index, with annual price growth of 9.0 per cent. Paris (+4.5%) and Madrid (+4.3%) also continued to see growth, in contrast to London which slipped -2.7%.

Shanghai (+7.9%), Singapore (+7.7%), Hong Kong (+7.3%), Tokyo (5.7%) and Shenzhen (4.8%) were also among the strongest performers, but in all cases growth slowed dramatically over the year as cooling measures came into effect.

San Francisco (+6.9%) and Los Angeles (1.9%), both significantly cheaper than New York, also saw values rise.

Capital values price per square foot and price movements in local currency – cities ranked by value

City

Price PSF (USD)

Price PSF (GBP)

Price PSM (EUR)

Half year growth

Full year growth

5 year growth

10 year growth

Hong Kong

$4,660

£3,650

€44,130

 

-0.4%

7.3%

38.7%

199.1%

Tokyo

$3,100

£2,430

€29,170

1.8%

5.7%

54.8%

44.6%

New York

$2,610

£2,060

€24,540

-3.1%

-4.3%

18.6%

40.3%

London

$1,880

£1,470

€ 17,650

-0.7%

-2.7%

-14.6%

41.2%

Shanghai

$1,740

£1,370

€16,360

2.4%

7.9%

28.8%

133.3%

Sydney

$1,680

£1,320

€16,150

-0.6%

-1.7%

55.9%

80.2%

San Francisco

$1,630

£1,290

€15,280

2.2%

6.9%

52.4%

80.5%

Singapore

$1,590

£1,250

€14,640

0.4%

7.7%

0.4%

40.1%

Paris

$1,540

£1,210

€14,530

3.5%

4.5%

13.3%

41.4%

Shenzhen

$1,460

£1,140

€13,670

-0.2%

4.8%

101.1%

387.5%

Beijing

$1,450

£1,130

€13,670

0.0%

-1.7%

95.1%

321.7%

Los Angeles

$1,410

£1,120

€ 13,240

0.5%

1.9%

38.7%

75.1%

Moscow

$1,250

£990

€11,840

-1.3%

-4.6%

-15.5%

5.6%

Miami

$1,020

£800

€ 9,580

-0.1%

0.5%

22.4%

38.7%

Berlin

$900

£700

€ 8,400

3.8%

9.0%

52.8%

118.2%

Dubai

$750

£590

€ 7,100

-3.1%

-6.0%

-12.3%

-28.6%

Madrid

$740

£580

€ 7,000

0.9%

4.3%

13.3%

-12.4%

Currency conversions calculated using end of 2018 exchange rates from the Bank of England.

 


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