_Global Forecast 2019: Which cities will outperform?

According to our Prime Global Cities Index, which tracks the movement in prime prices across 43 cities worldwide, luxury residential prices are now rising at their slowest rate since 2012. The proliferation of property market regulations, the rising cost of finance, uncertainty surrounding Brexit and in some markets, a high volume of new supply, is weighing on prime prices. 

More muted growth is the main story behind our 2019 forecast. In 2018, the gap in annual price growth between the strongest and weakest-performing markets will end the year at 25 percentage points, in 2019, we forecast this figure will shrink to 16 points as the outliers start to converge. 

Of the 15 cities that we forecast, the key European cities of Madrid, Berlin and Paris, lead our forecast for 2019 with growth of 6%. Still positive, but marginally down on 2018, the normalisation of monetary policy, weaker economic growth and a fragile political landscape post-Brexit will influence demand, but the relative value of these cities remain a key driver. 

Markets that have been the recipients of new macro-prudential measures in 2018, such as Hong Kong and Singapore, will slip down the rankings as buyers and developers adjust to new taxes. Vancouver, which also falls into this bracket, is the exception to the rule. Our weakest prime market in 2018, largely as a result of hikes to its foreign buyer tax and stamp duty in early 2018, Vancouver is expected to see prime prices stabilise in 2019 as local buyers start to identify buying opportunities. 

Of the 15 cities, Sydney, London and New York sit mid-table with forecasts of 0%-2% growth. A lack of new supply is supporting Sydney’s prime market. In London, changes to stamp duty have now been fully absorbed, suggesting activity could strengthen once political uncertainty in relation to Brexit starts to recede. In New York, economic growth and wealth creation are starting to cancel out the high completion rates observed in the prime market over the last few years. 

Read the full report here

For further information please contact Kate Everett-Allen