Home prices in gateway cities in the U.S. and Canada posted strong gains during the third quarter last year, bucking the global slowdown trend, according to a Knight Frank report released Monday.
Overall, the composite price across 150 cities worldwide increased 4.7% in the year through September 2017, according to Knight Frank Global Residential Cities Index.
By comparison, global residential prices rose 6.9% and 5.8% during the first two quarters of 2017, respectively.
The global slowdown was largely due to declining growth rates of Indian and Chinese cities, according to Knight Frank.
China, in particular, seems to have succeeded in curbing its runaway home prices by mandating higher down payments, stricter requirements for loans and other measures. The country occupied the first seven of the top 10 spots with highest price growth during the first three months of 2017, then went down to three spots in the second quarter and disappeared completely from the top-10 in the third quarter.
In the meantime, residential markets in the U.S. and Canada remained robust over the third quarter. Among the 30 North American cities Knight Frank tracks, 19 had an increasing growth rate while only 11 saw their rates of growth decline.
“Improving economic indicators—the U.S. economy is forecast to rise by 2.3% in 2018 according to the IMF—falling unemployment, and the fact that interest rates, although rising, are still at long-term lows, are driving domestic demand,” said Kate Everett-Allen, author of the Knight Frank report.
In addition, despite the strong U.S. dollar, international buyers are also active in the U.S. market, she said.
Seattle was the fastest-growing U.S. city overall, as home price appreciated 13% annually in the third quarter.
As for Canada, “a lack of supply in some of the major cities is helping to support prices,” Ms. Everett-Allen said.
However, Toronto dropped from the top spot on the list to fourth place, as its price growth rate declined from 29% year-over-year in the second quarter to 18% in the third quarter.
Reykjavik, Iceland’s capital and the largest city in the country, claimed the first place in the ranking, with home prices rising 21.3% year-over-year in the third quarter of 2017. Abu Dhabi, capital of the United Arab Emirates, landed the last spot on the ranking, with home prices falling 9.3%.
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