Luxury Home Prices Forecast to Rise Globally This Year—but Not as Much as Expected
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Luxury Home Prices Forecast to Rise Globally This Year—but Not as Much as Expected

Increases of 4.4% are in the cards, down from 6.1% growth forecast at the end of 2021, according to Knight Frank.

Thu, Aug 11, 2022 9:40amGrey Clock 2 min

Inflation, rising interest rates and other uncertainties have cooled price growth predictions for luxury homes in cities around the world, according to a Wednesday report from Knight Frank.

Prices of high-cost homes in 25 global cities are expected to rise 4.4% on average in 2022, down from 6.1% in December 2021, the data showed.

“Despite the reduction…this still represents strong growth, outpacing our prime index’s performance in nine of the last 10 years,” Kate Everett-Allen, Knight Frank’s head of international residential research, said in the report.

Nine of the cities tracked in the report are set to see stronger price appreciation than predicted at the end of 2021, with 11 now expected to see less robust growth than anticipated and five remaining unchanged, the report said.

Miami and Dubai landed in the No. 1 spot for price growth, with both cities expected to see prices rise by 12% this year, the data showed.

“However, for both prime markets this represents a slowdown compared to their stellar performances in 2021,” Ms. Everett-Allen continued

Price growth for luxury homes in Auckland has slowed the most—22%—followed by Seoul and Vancouver, which saw drops of 12% and 5%, respectively, since the end of last year.

In Auckland, tighter lending laws were introduced at the end of 2021, plus six interest rate rises starting in October, are behind the shift in buyer sentiment “from a fear of missing out to a fear of overpaying,” the report said.

Although growth is set to slow in 2023, many cities will still see prices increase.

In the U.S., Miami and Los Angeles are predicted to see the largest price acceleration, 8% and 7%, respectively. London (6%), Madrid (6%) and Seoul (5%) are also in the top five cities for price growth next year.

“Overall, we expect more muted price growth in 2023, averaging 2.8% growth across all 25 cities,” Ms. Everett-Allen noted.

Reprinted by permission of Mansion Global. Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication:  August 10, 2022.


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RMIT expert says a conflation of factors is making the property market hard than ever to predict

By Robyn Willis
Thu, Oct 6, 2022 9:52am < 1 min

A leading property academic has described navigating the current Australian housing market ‘like steering a ship through a thick fog while trying to avoid obstacles’.

Lecturer in RMIT’s School of Property Construction and Project Management Dr Woon-Weng Wong said the combination of consecutive interest rate rises aimed at combating high inflation, higher property prices during the pandemic and cost of living pressures such as the end of the fuel excise that occurred this week made it increasingly difficult for those looking to enter or upgrade to find the right path.

“Property prices grew by approximately 25 percent over the pandemic so it’s unsurprising that much of that growth ultimately proved unsustainable and the market is now correcting itself,” Dr Wong says. “Despite the recent softening, the market is still significantly above its long-term trend and there are substantial headwinds in the coming months. Headline inflation is still red hot, and the central bank won’t back down until it reins in these spiralling prices.” 

This should be enough to give anyone considering entering the market pause, he says.

“While falling house prices may seem like an ideal situation for those looking to buy, once the high interest rates, taxes and other expenses are considered, the true costs of owning the property are much higher,” Dr Wong says. 

“People also must consider time lags in the rate hikes, which many are yet to feel to brunt of. It can take anywhere from 6 to 24 months before an initial change in interest rates eventually flows on to the rest of the economy, so current mortgage holders and prospective home buyers need to take this into account.” 


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