The latest edition of Knight Frank’s Prime Global Cities Index has shown that the price of prime residential property in Dublin, defined as the top 5% of the housing market, increased by 0.9% in Q3 and 5.5% on an annual basis. While Dublin remained in 13th position globally, it was Europe’s strongest performing city for the second consecutive quarter.
Globally, the Index increased by 3.8% in the year to September 2016, down from 4.6% in Q2. The decline in prime global property prices can be attributed to an increasingly popular phenomenon whereby by local governments are enacting a range of measures to cool demand. This is best illustrated in the case of Vancouver. Although still on top, Vancouver’s quarterly price growth slipped to 1.5% in the three months to September, due, in part, to the introduction of a 15% tax for foreign buyers. Similarly cities such as Sydney, Melbourne and Toronto, and indeed many Chinese cities such as Shanghai and Guangzhou, all registered slower rates of growth in Q3 as a result of the imposition of new taxes either in the form of higher stamp duty, additional taxes for foreign buyers or the closing of tax loop holes for non-residents. More broadly, elections and referendums, in particular Donald Trump’s election as the 45th President of the United States, will result in an intensification of a wait and see approach amongst buyers which emerged in Q3 as buyers delayed purchases following what was a quarter of great uncertainty for investors.
Looking forward to the final quarter of the year, Currency movements will be the single largest determinant of international demand in the world’s top cities over the next 6 to 12 months. With equities and bonds set to see a rollercoaster ride, and fluctuations in currency values creating opportunities for those willing to invest across borders, prime real estate in safe haven markets will be in demand among investors as a result of the uncertainty caused by recent events.