The luxury property market in Vancouver is booming, with prime prices in the city up by 20.4% in the third quarter, driven by a shortage of supply, strengthening local demand and interest from foreign buyers. The Canadian city was one of three to record double-digit annual growth in the third quarter of this year, according to the latest Knight Frank Prime Global Cities Index, released Tuesday. The index looks at property in the top 5% of the wider housing market in each metro area. Sydney and Shanghai also performed well, with luxury property prices up 13.7% and 10.7%, respectively, compared with their values in the third quarter of 2014. Sydney’s property prices are accelerating in part because of the weak Australian dollar, an undersupply of new homes, and a strong local economy. In Shanghai the reversal of strict housing policies and the introduction of fiscal measures, including tax and interest-rate cuts, have fueled demand.
Overall, in the third quarter compared with the same period in 2014, the index had a sluggish average rise of 1.9% in the value of the most-expensive homes in the world’s top cities. Kate Everett-Allen, partner of residential research at Knight Frank, said that behind the top rankings, however, the index is looking "less than robust," pointing out that the index's annual rate of growth has slowed significantly from 7% two years ago to 1.9% currently. The report found that 73% of cities recorded positive annual price growth in the year to September, but this is down from 91% in 2013. Singapore is the poorest-performing prime market, with a fall in luxury property prices of 7.9% this quarter. But its rate of annual decline has slowed, from a fall of 15.2% in the previous quarter. Knight Frank says that as quantitative easing unwinds and a U.S. rate rise draws near, prime assets will remain on the radar of investors. The big concern is the impact of a possible slowdown in the Chinese economy and whether wealth from China will continue to bolster overseas property markets in the U.K., U.S., Canada and Australia.