Melbourne’s once hot luxury property market has cooled off, but the city still ranks among the world’s top 50 for price growth.
Victoria’s capital came in at No. 41 on Knight Frank’s Prime International Residential Index (PIRI), having notched 2.2 per cent gains last year.
This marked a heavy fall from 14th place the year prior, when a 9.8 per cent annual price rise was recorded.
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The index tracks price movement in luxury residential markets — defined as the top 5 per cent of a market, by value — of 100 cities across the globe.
It reported reduced price gains generally across the board, with the combined value of the 100 markets rising 1.3 per cent last year compared to 2.1 per cent the year before.
“This decline comes as little surprise,” the report said.
“As we learn to live without the ultra-low interest rates that have supercharged real estate markets globally since 2008, lower price growth is an inevitable consequence of the shift in monetary policy.”
Melbourne was the third ranked Australian city on the latest list, behind Sydney (30th place with 3.1 per cent growth) and Brisbane (31st and up 3 per cent), and ahead of Perth and the Gold Coast (both 42nd and up 2.1 per cent).
Sydney also took a tumble from 9th place and 10.7 per cent gains in 2017.
Knight Frank’s Australian head of residential research Michelle Ciesielski said the Australian luxury market continued to “track above the global average” for residential price growth in 2018.
But she said the gains being experienced by Australian cities — and cities across the world — were “converging”, with all five now within 1 per cent of each other when the range “was closer to 19 per cent” three years ago.
Knight Frank also found Australia remained the third biggest target for buyers planning on snapping up prime residential real estate, behind the US and UK, with our political stability and lifestyle and education offerings major drawcards.
Philippines capital Manila topped PIRI with 11.1 per cent growth — a boost the report said was “driven by a lack of supply and the Philippines’ thriving economy”, but well below the rise experienced by the top global market in previous years.
“In the 12 years we have been compiling PIRI, the top-performing market has yet to record annual growth below 21 per cent (until now),” the report said.
Edinburgh came in second place with 10.6 per cent annual gains, followed by Berlin (10.5 per cent), Munich and Buenos Aires (both 10 per cent), Mexico City (9.5 per cent) and Singapore (9.1 per cent).
A host of cities went backwards, with Nigeria’s largest city Lagos shedding 25 per cent from its luxury market in 2018.
Also notching price falls were Vancouver (-11.5 per cent), Istanbul (-10.4 per cent) and The Hamptons (-10%).
GLOBAL LUXURY MARKET PRICE GROWTH
1. Manila: 11.1%
2. Edinburgh: 10.6%
3. Berlin: 10.5%
4. Munich: 10%
4. Buenos Aires:
6. Mexico City: 9.5%
7. Singapore: 9.1%
8. Boston: 8.6%
9. Madrid: 8.1%
10. San Francisco: 7.8%
30. Sydney: 3.1%
31. Brisbane: 3%
41. Melbourne: 2.2%
42. Perth: 2.1%
42. Gold Coast: 2.1%
Source: Knight Frank’s Prime International Residential Index for 2018