It has been a long time since global luxury home prices have shown any signs of weakness, but it is happening now.
Global luxury home prices fell in the first quarter for the first time since the 2008-2009 global financial crisis.
An index of prime prices in 46 cities declined by 0.4 per cent year on year, the first drop since 2009, according to real estate consultancy Knight Frank. This is a sharp reversal from the 10 per cent growth seen in the fourth quarter of 2021.
New Zealand’s housing market posted the biggest slump, with luxury home prices in Wellington, Auckland and Christchurch falling by double digits. Major cities including San Francisco, New York, Los Angeles, Hong Kong and Vancouver also saw prime prices drop.
Knight Frank defines prime homes as the top 5 per cent of a market in terms of value.
“The slowdown in growth has overwhelmingly been driven by sharply higher interest rates following recent tightening in global monetary policy,” Mr Liam Bailey, Knight Frank’s global head of research, wrote in a report.
Still, the majority of cities tracked by the firm saw prices increase in the first quarter, with Dubai and Miami posting double-digit gains. Prices in Dubai surged 44 per cent, bringing its total pandemic-era growth from March 2020 to 149 per cent.
While luxury housing markets are likely to experience continued downward pressure for the next few quarters, there are few signs of a repeat of the financial crisis, when the index fell 8.2 per cent from peak to trough, Mr Bailey wrote.
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