Around the World, Luxury Home Prices Lost Momentum in the Second Quarter

Downtown Manila. Getty Images

Luxury home price growth lost some steam in the second quarter across an index of 44 major cities worldwide.

The annual rise in prime home prices slowed to 2.6%, compared with 4.1% in the first quarter, according to the latest index from Knight Frank on Friday.

Asia led with annual growth above 10% in Manila, Mumbai and Delhi. Manila topped the list with a 26% increase in prime prices in the 12 months ending in June 12, as well as the highest quarterly growth, at 16.4%. Miami and Los Angeles rounded out the top five with prices increasing 8.9% and 7.1%, respectively.

The heavy hitters of New York, London, Hong Kong and Dubai all saw prices decrease on both an annual and quarterly basis, though in New York, the rate of decline improved from the previous quarter, from 2.5% in the red in the first quarter to half a percentage point in the second.

The city that improved the most in the second quarter was Stockholm, where luxury prices still declined year over year but at a much slower rate than the previous quarter.

On the flip side, Dubai saw the sharpest slowdown in the second quarter, after a 124% runup in prices since 2020. Prices in the frothy Gulf city decreased a negligible 0.3% annually in the second quarter, but it was a sudden reverse from a 15.9% spike in home prices in the first quarter.

By contrast, Miami and Manila, which saw the next highest Covid-era spikes, are still seeing prices rise, as are Los Angeles and Seoul, which rounded out the top-five fastest-growing markets since 2020.

Overall, North America led growth in the second quarter with an aggregate 3.7% growth annually, followed closely by Asia-Pacific’s 3.3%. Europe dragged the average down with 1.1% growth annually. Across the board, however, the 2.6% growth rate was well below the long-term average of 5.3%, per the report.

After peaking in 2022, home-price appreciation began to slow globally before picking up again in late 2023, followed by the current setback. In all, prices increased in 75% of the 44 markets tracked by the report in the second quarter, lower than the 83% that experienced growth in the first quarter.

“The slowing in price growth this quarter across global prime markets reflects the fact that, without further stimulus from rate cuts, the bounce in market pricing we have seen over the past few quarters is running out of steam,” Liam Bailey, global head of research at Knight Frank, said. “The biggest influence on future price growth lies in the hands of central banks and their confidence to cut rates further over the next 12 months.”

Via Mansion Global