Europe’s woes hit global demand for luxury homesPosted on Monday, May 14, 2012 - 06:41 am
LONDON (Reuters) – Demand for the world’s priciest houses is likely to cool this year after two years of strong growth, as concerns over Europe’s debt crisis, the health of the global economy and governments price cooling measures in Asia dissuade buyers, research showed.
Data from property consultancy Knight Frank showed the average price of luxury homes across 23 key world cities fell for the first time since 2009 by 0.4 percent in the first quarter of 2012, reflecting slowing demand.
This was also sharply down from the same period in 2011, during which global luxury house prices had risen 6.6 percent, Knight Frank said.
“There’s an element of nervousness among investors as to where the economy is going. In the last two-to-three years you’ve seen quite a big rebound in repricing, and the slowdown really comes down to the euro zone crisis and a much slower global economic recovery than was anticipated,” Knight Frank’s Head of Residential Research, Liam Bailey told Reuters.
Europe’s debt crisis hit a new hurdle last week after the Greek public rejected the bailout at voting polls, while economists are predicting another year of slow growth for the U.S. In Asia, the Chinese and Singaporean governments have introduced measures to cool their red-hot property markets.
Knight Frank said the fall in luxury house prices in the first three months of the year was led by Tel Aviv, where prices fell 6.6 percent, and Kiev, where values slid 6.4 percent.
Luxury home values in the U.S. cities of Manhattan, New York and Miami fell 4.3 percent and 1.9 percent respectively in the first quarter, reversing a trend of double digit growth registered in the past year.
Knight Frank said that there was however still strong safe haven demand from international investors for cities like London and Singapore, where prices rose 2.7 percent and 1.9 percent respectively despite new property taxes introduced over the period.
Global luxury house prices surged in the past two years as safe haven-seeking foreign millionaires snapped up houses in New York, Paris and London, while strong economic growth and a rising middle class fuelled local demand for luxury homes in emerging cities like Nairobi and Jakarta.
(Reporting by Brenda Goh; Editing by Jon Loades-Carter)