Guangzhou sees world’s highest rises in luxury home prices, surging 36pc in past year

China seizes three of the top five spots in Knight Frank luxury home price index, but growth there predicted to slow. HK prices ‘to continue going up’

PUBLISHED : Thursday, 17 August, 2017, 8:32am
UPDATED : Thursday, 17 August, 2017, 11:29pm

Guangzhou, China’s third largest city, has seen a whopping 35.6 per cent increase in luxury property prices over the 12 months to June – the highest growth among 41 major cities polled globally by Knight Frank.

The property consultancy says luxury home prices in those major centres increased in the first half of 2017 by an average of just 4.4 per cent compared to the same period last year, and even that upturn can largely be attributed to China’s cities, which led the index for three consecutive quarters.

The prime properties in the company’s report correspond to the top 5 per cent of the housing market in each.

Guangzhou leads the pack and collectively with growth in prime home prices in Beijing, Shanghai, and Guangzhou, they grew 23.4 per cent on average.

However, all three Chinese cities tracked by the index recorded a decline in annual growth compared with the rate seen in last quarter.

The capital city Beijing recorded the largest drop – down from 22.9 per cent year-on-year in March to 15.0 per cent annual growth as at the end of June.

Luxury house prices in China are also rising from a relatively low price base, which leads to higher increases compared with the world’s other most expensive locations.

But as prices grow at a higher level and policymakers in China enforce stricter cooling policies, the huge surges in Chinese cities may not last much longer, predicts Kate Everett-Allen, head of international residential research at Knight Frank.

We expect luxury residential prices in Hong Kong to continue going up due, mainly to limited supply of such flats
Knight Frank report on global city luxury home prices

“We expect the rate of growth in Chinese cities to slow as cooling measures take effect. The number and type of regulations vary from city to city, but broadly speaking, buyers now need to put down larger deposits, and there are often limits on the number of properties that can be bought by individuals or families,” she said.

The report shows Hong Kong’s luxury residential prices grew 8.1 per cent during the second quarter of 2017 compared with a year ago, faster than in the first quarter.

“We expect luxury residential prices in Hong Kong to continue going up due, mainly to limited supply of such flats,” said the report.

Other cities recording strong growth included Toronto (+20.7pc), Seoul (+19.9pc), Sydney (+11.5pc), Madrid(+10.7pc), Berlin (+9.7pc), Cape Town (+9.2pc) and Melbourne (+9.1pc).

The Asia-Pacific region took six of the top 10 spots on the list, but with a slower growth pace compared to last quarter.

“The majority of prime residential markets in Asia saw growth rates slow in the second quarter of 2017,” added Nicholas Holt, Knight Frank’s Asia Pacific head of research.

“Tier-1 Chinese cities continue to see the impact of home purchase and lending restrictions, while Singapore saw price performance in prime residential homes slow since the previous quarter.”