Prime property prices have moderated around the world but Vancouver in Canada continues to buck the trend with prices in the city up 26per cent year on year, the latest global index shows.
Vancouver leads the Prime Global Cities Index from international real estate firm Knight Frank for the fourth quarter in a row as a severe lack of supply is creating an upward pressure on prices.
Indeed Knight Frank says that there is little evidence that February’s increase in land transfer tax in Vancouver from 2per cent to 3per cent on all purchases above $2 million has dented sale volumes.
Three other cities, Shanghai, Sydney and Melbourne also recorded double digit annual price growth in the year to March 2016, but the gap between this top tier and the remaining cities has widened.
Strong price growth in Sydney and Melbourne mean Australasia is the strongest performing world region while out of 35 cities, London has slipped to 23rd in the annual rankings with prime prices up 0.8per cent year on year. Hong Kong and Taipei occupy the bottom rankings with luxury prices dipping 6.4per cent and 7.6per cent respectively
The index report says that record low interest rates and cheap finance fuelled demand in Shanghai leading to price growth of 20per cent year on year, however, in March the government tightened mortgage lending rules which is likely to result in slower growth in the second quarter.
Overall prime property prices across the 35 cities in the index increased on average by 3.6per cent in the 12 months to March 2016. The index entered a period of steady growth in 2014, consistently recording annual growth of 3per cent to 4per cent in the subsequent seven quarters.
According to Propertywire, no city has recorded a double digit annual decline in prices since the second quarter of 2015. New York and Miami, where cash buyers now have to comply with new transparency rules above set price thresholds, continue to record steady price growth.
Prices in prime central London increased by only 0.8per cent in the year to March, its lowest figure since October 2009, when a 3.2per cent decline was recorded as the market readjusted following the collapse of Lehman Brothers.
The report suggests that the more muted performance is as a result of a series of tax changes and a preceding period of exceptional growth. As of 01 April 2016 buy to let investors and second home buyers pay an extra 3per cent in stamp duty on any UK purchase.
Although prices in Paris dipped 3per cent in annual terms, prices stabilised over the last quarter as French buyers, having recognised value in their capital’s market, increased their market share.
‘New regulation in the form of measures to improve transparency, new taxes or fees for foreign buyers are increasing in number. However, the impact on the market of such measures is largely dependent on market fundamentals and where he market is in relation to its property market cycle,’ said Kate Everett-Allen, residential research partner at Knight Frank.