Monday, 14 May 2012 8:24 AM
House prices in the world's key cities showed their first quarterly fall since 2009 in the first three months of 2012, according to Knight Frank.
The property firm said the 0.4 per cent fall was not surprising given that quarterly growth averaged just 0.6 per cent in 2011. So far 2012 has been an even more difficult year, with the Eurozone crisis continuing and a slowdown in the Asian economies.
London (11.3 per cent) was one of just four global cities to see double digit house price growth over the last 12 months. Nairobi (24.2 per cent), Jakarta (14.3 per cent) and Miami (13.9 per cent) joined the UK capital in the exclusive club as prices across all global cities rose just 1.4 per cent in the year to March 2012.
Knight Frank said that London and Singapore both showed that there is still resilience in prime markets as they shrugged off the introduction of higher rates of stamp duty in the first quarter of 2012.
In London prices and applicants both increased despite the introduction of seven per cent stamp duty on properties over £2m. In Singapore a new 10 per cent rate for foreign buyers introduced in December 2011 dented demand but not prices.
Nicholas Holt, Knight Frank's Asia-Pacific research director, said: "Prices not only held up but actually increased slightly at the very top end of the Singapore market in Q1 2012. This was not only due to fairly resilient domestic demand, but also due to wealthy Chinese, Indonesian and Indian buyers who continued to buy in this segment of the market undeterred by the surtax."
Knight Frank expects prices to remain subdued in 2012 with London, Moscow, Jakarta, Nairobi and Singapore expected to be the strongest performers.
However, it says a new deflationary cycle in the luxury global market is unlikely as capital flight continues to cities with low political risk, good security and ideally a tax regime friendly to people with high net worth.