The latest edition of Knight Frank’s Prime Global Cities Index has shown that the price of prime residential property in Dublin increased by 0.5% in Q2, making it the fastest growing in city in Europe over the period. This represents the third consecutive quarterly increase in the price of prime property in Dublin, defined as the top 5% of the housing market. The growth in Dublin was in contrast to the rest of Europe where, in the main, prices either fell or remained flat. For example, prices in Paris and Rome were unchanged while London and Madrid contracted by 0.3% and 0.9% respectively. Dublin now sits in 13th position globally in terms of annual growth, up eight places from 21st position registered in Q1, having outperformed other major global cities such as Singapore (0.2%) and New York (0.1%) in Q2.
Separate analysis conducted by Knight Frank, using data from the Property Price Register, confirmed that the upper-end of Dublin’s property market continued to transect well in the first half of the year. Over the period, there were 168 transactions valued in excess of €1 million, an increase of 14% in comparison to the first half of 2015. This is in sharp contrast to the core residential market, with the number of transactions valued at less than €500,000 actually declining by 13%. The value of sales in Dublin’s prime property market in the first half of the year stood at €368 million.
Globally, the Knight Frank Prime Index increased by 4.4% in the year to June, the highest rate of growth in two years. Vancouver leads the rankings for a fifth consecutive quarter, growing by 13.4% in Q2. In an effort to control the flow of foreign capital into Vancouver’s housing market and improve affordability for local residents, the British Columbia Government introduced a new 15% tax for foreign buyers earlier this month, which should feed into a moderation of the rate of growth in Q3. A number of other cities have recently been subjected to such cooling measures. For example, prime property prices in Shanghai increased by 5.9% in Q2, down from 9.3% in Q1 on the back of tighter mortgage lending rules. The rules require home buyers to deposit 50-70% of the price of a second home, compared to 40% previously.
A further factor to consider going forward is the impact the UK’s vote to leave the European Union will have on the prime market here. Even at this early stage, we at Knight Frank have seen a noticeable increase in enquiries from global high-net-worth-individuals who are looking for a home for their money in the post Brexit landscape. As Europe’s fastest growing economy, Ireland is a strong candidate destination in this respect. Furthermore, companies may look to relocate some of their operations to Dublin which would boost demand for housing. For example, London represents the largest market for euro-denominated trading, and major banks with euro trading desks in London may find that they need to relocate some of these functions to office markets within the EU. While this does not necessarily mean a wholesale relocation, a significant portion will have to move, with Dublin, Paris and Frankfurt among the prime contenders to take this business. Dublin’s considerable existing back and middle office financial services infrastructure will be a positive in attracting this higher value front office business. Finally, Dublin also holds appeal due to the cultural similarities that the city shares with London which should give it an edge over other continental cities.