US prime cities record stronger price growth in the first half of the year

KUALA LUMPUR: Prime residential prices in 32 cities rose 6.2% on average led by luxury homes in prime cities of the United States in the first half of 2014, putting Asia-Pacific and Europe at the bottom of the list, said Knight Frank Research’s international residential consultant Kate Everett-Allen in the Prime Global Cities Index report published this month. Everett-Allen noted that of the 32 prime residential markets tracked by the index, 27 recorded positive annual price growth in the year up to June 2014, up from 21 cities a year ago. “New York, Los Angeles, Miami and San Francisco all recorded double-digit annual price growth in the 12 months to June, placing them in the top 10 rankings,” she said. Everett-Allen noted that New York recorded growth at 18.4%, Los Angeles at 17.8%, Miami at 17.2% and San Francisco at 12.5% on a year-on-year (y-o-y) basis. Despite US prime cities being in the top 10, Jakarta and Dublin recorded the strongest y-o-y growth in the list with 27.3% and 23.5% respectively. “However, in both cases the rate of growth has slowed in the second quarter. In Dublin’s case, the rate of growth slowed from 5.6% in the first quarter to 2.1% in the second,” said Everett-Allen. “However, given Ireland’s improving economic landscape and the expiry of Ireland’s capital gains tax incentive at the end of 2014, we expect prime prices will continue their upward trajectory in the second half of the year.” While Jakarta took the first place for the most price growth globally, Beijing is at sixth place at 13.2%, Sydney at 10.9%, Bangkok at 6.4% while Bengaluru, Shanghai and Kuala Lumpur at 5.5%, 4.8% and 3.1% respectively. Dubai’s prime prices rose 6.3%, putting it at 13th place in the list. Its mortgage cap and the doubling of transfer fees at end-2013 contributed to the rise. “This has affected buyer activity more than forecast as new research by Knight Frank revealed around 25% of purchases are mortgage financed in the Emirates,” said Everett-Allen. This article first appeared in The Edge Financial Daily, on August 29, 2014. For more information on Building and Construction seminars, please visit www.asiapacificevents.com