Melbourne ranks fifth in Prime Global Cities Index
According to the latest research from the independent global property consultancy firm Knight Frank, Melbourne and Sydney have been ranked within the top ten of the Knight Frank Prime Global Cities Index for Quarter 2.
The Prime Global Cities Index tracks prime residential prices across 37 global cities worldwide on a quarterly basis. In the year to June 2016, the index increased by 4.4%, the highest rate of growth over the past two years.
Vancouver remains at the top of the ranking for the fifth consecutive quarter within the Prime Global Cities Index and has recorded the strongest price inflation, where prime residential prices surged by 36% in the year to June 2016.
Another Canadian city ranked within the top 10 which was Toronto at number four with 12.6% growth over the past 12 months, whilst Melbourne and Sydney ranked fifth and sixth respectively.
Melbourne’s prices increased by 11% over the last 12 months to June 2016, whilst Sydney grew by 10.2%. However, over the past three months, Sydney grew at 4.6% compared to Melbourne’s 1.8% and both markets are expected to slow down.
Interestingly, the Quarter 1 report for 2016 ranked Sydney and Melbourne in third and fourth position respectively with a growth of 12.3% and 12.1% over the 12-month period to March 2016. It’s no wonder why both cities have seen a slight reduction over the past three months, due to the residential property markets slowing down, after coming out of a booming market.
Knight Frank Residential Research Director Michelle Ciesielski, states that Australia is considered highly desirable for long-term wealth preservation, although there is still global uncertainty.
“Australia is highly ranked for lifestyle and well-placed for the education of future generations, despite the Foreign Investment Review Board (FIRB) application fees, as well as foreign investor duties and land tax surcharges in Sydney and Melbourne.
“Locally, Australia has seen a steady recovery in non-mining activity towards a more services sector- dominated economy. The share market has experienced an upward trajectory over the course of 2016, whilst business confidence remains positive in this low-interest environment,” says Ms Ciesielski.
Shanghai took second position in the Knight Frank Global Cities Index with 22.5% increase over the past 12 months, followed by Cape Town which saw a growth of 16.1%. Toronto came in at fourth with 12.6% growth.
The report shows that there was a total of 26 cities out of the possible 37 that saw some level of growth over the past 12 months, with just six cities in the double figures, whilst 11 cities saw a decrease including New York (-0.5%), London (-0.6%) and Hong Kong (-8.4%), which sits at the bottom of the rankings.
The majority of these 37 cities indicate that their market direction of annual price growth is set to head downwards, four to remain stable, whilst 14 cities are expected to see price growth, including Vancouver, Shanghai and Cape Town.
Interestingly, some of the top performing markets are situated in jurisdictions where new foreign buyer tax arrangements have been introduced. Both Sydney and Melbourne have recently introduced new surcharges and stamp duty for foreign buyers including a 4 per cent stamp duty surcharge and an extra 0.75 per cent land tax from 2017 for foreign buyers in Sydney, whilst Melbourne foreign buyers will need to pay stamp duty of 7%.
However, in Vancouver, the British Columbia Government plans to introduce a new whopping 15% tax for foreign buyers, which commenced on 2 August 2016.
These top cities in Knight Frank’s Prime Global Cities Index also sits closely to the Economist Intelligence Unit’s Liveability Survey which surveyed 140 cities worldwide. Melbourne was named the most liveable city in the world for the sixth year running, whilst Vancouver ranked number three and Toronto sat number four.
The Knight Frank Prime Global Cities Index allows both investors and developers to monitor and compare the performance of prime residential prices across the key global cities. Prime property corresponds to the top 5% of the wider housing market in each city.
Published on 6th of September 2016 by Marty Stanowich