Luxury property price growth slowed worldwide in the third quarter, with prices increasing at an annual rate of 2.9% across 44 global cities, according to Knight Frank’s latest Prime Global Cities Index released on Wednesday.
That’s the lowest annual rate of price growth this year, falling considerably below the 10-year average of 4.6%, too. Though central banks are expected to cut rates into next year, which will likely spur luxury housing markets to pick up pace again soon.
“The recent slowdown in global price growth reflects the need for additional stimulus through further rate cuts before prices can strengthen,” said Liam Bailey, global head of research at Knight Frank. “We expect the anticipated wave of cuts into 2025 to support higher house price growth in the medium term.”
Of the 44 cities tracked, 29 reported an annual increase in luxury home prices, and 31 saw a quarterly uptick.
The luxury market in the Philippines capital of Manila has continued to flourish, with an annual price growth of 29.2% and a 4.6% quarterly increase. The continued increase in home values is largely driven by “strong economic growth and rising consumer confidence,” according to Knight Frank.
Dubai, which has been a luxury hot spot since the pandemic, is starting to see its price growth level out, with a quarterly increase of just 0.5%. Annually, though, prices were still up a substantial 16.9%.
“The emirate’s remarkable performance is evident, with Dubai’s prime market soaring by an astonishing 190% since early 2020, outperforming all other cities in the index during that period,” according to the report.
Tokyo ranked No. 3 for annual price growth in the third quarter, increasing by 12.8%. However, prices dropped 2.8% on a quarterly basis, and as the yen strengthens and the Bank of Japan is expected to raise rates, slower price growth is possible in the coming quarters.
In the U.S., Los Angeles and Miami saw the strongest annual price growth, with increases of 7.9% and 7.1%, respectively. New York was the only U.S. city in the index to report an annual decrease in luxury home prices, falling by 0.5%. Though, New York prices were up 0.9% quarterly.
Luxury prices are falling in London as well, dropping 2.1% annually and 0.3% quarterly in the third quarter.