Australia dominates in the global luxury market’s top annual risers

While these increases might seem large, they pale in comparison to the ranking’s top three cities, Manila, Dubai and Shanghai, all of which recorded respective 21.2 per cent, 15.9 per cent and 10.4 per cent increases.

Every Aussie market reported a rate of growth, which exceeds the 2.1 per cent average annual price growth of the 46 markets covered in the report.

Michelle Ciesielski, Knight Frank head of residential research, explained that nearly 70 per cent of cities reporting price rises over the past year “confirms that global housing markets are displaying signs of stabilisation, despite higher mortgage rates”.

While the yearly growth trend is a positive sign for global markets, she noted that 63 per cent of markets reported price increases over the year’s third quarter. This, Ms Ciesielski said, indicates “lingering uncertainty, primarily due to the potential for further interest rate hikes”.

“Ongoing uncertainty over inflation and interest rate risks continues to weigh on all levels of the global housing market, including the luxury segment, and is likely to limit price growth in the medium term,” she added.

“Globally, a more sustained upswing in demand and pricing will only be achieved once rates begin to move lower – which is unlikely to take place before mid-2024.”

After holding the official cash rate at 4.10 per cent at its last four board meetings, the Reserve Bank of Australia (RBA) is widely expected to raise the cash rate at its November board meeting, ratifying Ms Ciesielski’s point that a cash rate slowdown is likely some time away.

For Knight Frank’s head of residential Erin van Tuil, Australia’s representation in the ranking is indicative of increased demand, buoyed by rising migration and limited supply – two key factors underpinning the nation’s property market in the last year.

She explained price performance in the third quarter was inspired by an increase in prime residential transactions throughout the year’s second quarter. Moving forward, it’s taking longer to sell an Australian prestige home, with clients taking time to consider their options, even in light of limited available stock.

“Although uncertainty remains in global markets, Australia tends to be insulated with our relatively smaller prime residential market and this resilience is likely to deliver a strong price performance forecast for coming years,” Ms van Tuil concluded.

Knight Frank is forecasting prime luxury home prices to rise by 3 per cent at the end of 2023, 4 per cent next year, and 5 per cent in 2025.