Heading into 2019, many economists were predicting a “new normal” of higher interest rates and more expensive debt. Yet, as Knight Frank's Kate Everett-Allen points out, that failed to eventuate. “Instead, we have seen 144 interest rate cuts globally in the last year, with quantitative easing (QE), once an extraordinary measure, now back on the agenda in the US and the eurozone,” she said. With interest rates remaining lower for longer, the attraction of property ownership would seemingly be reinforced. Despite a year of luxury launches and headline sales of “trophy” homes, Knight Franks research shows that, at the prime end of the market particularly, sales volumes in the world’s top tier cities largely drifted lower during 2019. Prime price growth also stumbled across many cities. According to the latest Knight Frank Prime Global Cities Index, which tracks 45 markets, the average annual rate of growth in the year to the third quarter of 2019 was just 1.1 per cent — indicating that top end home prices have been rising at their slowest rate in a decade. 6 London locations from the movie Last Christmas Knight Frank’s analysts cite protracted Brexit negotiations, the US-China trade war, climate change and the Hong Kong protests for the uncertainty in 2019. But what about 2020? Paris leads the firm’s prime residential forecast for the new year, with price growth of 7 per cent predicted. Economic stability, low interest rates, constrained prime supply and strong tenant, as well as second-home demand, are expected to underpin price growth, with further stimulus provided by the Grand Paris project, Europe's largest infrastructure initiative, and the 2024 Summer Olympics. Is this plushest hotel room in Paris? Tying for second place are Berlin, Germany, and Miami, US, each with forecast prime price growth of 5 per cent. Strong demand (both domestic and international) and regeneration should keep Berlin high in the rankings, while Miami should benefit from Florida's state and local tax deduction, which attracts US tax migrants from high tax states such as New York and California. “With no income tax, no inheritance/estate tax and favourable corporate tax rates, Florida — Miami in particular — is back in the spotlight,” says Everett-Allen. Despite the bush fires in Australia, Knight Frank forecasts 4 per cent growth for property in Sydney, and 3 per cent for Melbourne, qualifying that this refers to the city areas only. Michelle Ciesielski, head of residential research, Australia, says: “Regional towns impacted by the bush fires are likely to show a decrease in values over the medium term. This is not likely to impact prime, or metropolitan residential values in Sydney and Melbourne.” But it’s a different story for regional areas, she says. “As we’ve experienced with bush fires in the past, it will take some time for new visitors and homebuyers to return to regional areas of NSW and Victoria,” said Ciesielski. The densely populated towns on the East Coast — among the worst-hit areas — are also sought after by retirees from Sydney, Melbourne and Canberra, she adds. Kim, Kylie, Khloé? The Kardashian-Jenner clan’s social media meltdowns “Those buying prime residential property tend to have several properties in their portfolio, so while there may be a pause in adding a lifestyle property, there still remains a limited number of prestige options available in Sydney and Melbourne. This has driven up values in past years and this will continue to do so in 2020.” Geneva, Switzerland is also tipped to experience 4 per cent growth resulting from the low interest rate environment and investment in the transport project the Leman Express. Joining Melbourne with a 3 per cent growth forecast are Madrid, Spain, and Singapore. “In Los Angeles, US, our forecast of 2 per cent [growth] hides a complex picture,” states the report. “Below US$2 million the market is active with demand for quality properties. Above US$10 million, the market is slow.” As for London, Knight Frank’s analysts say in the short term, the UK-EU divorce will pave the way for the release of some of the pent-up demand that has built in recent years, “though the extent to which this translates into transactions will depend on the size of the pricing expectation gap between buyers and sellers”. Premium home prices in Dubai, UAE, and New York — where prime prices have been falling at a faster rate in 2019 — tipped to lose -2 per cent and -3 per cent respectively this year. Why is Miami's Millionaires' Row losing its celebrity appeal? Despite sitting at the bottom of the firm's rankings for 2020, Vancouver, Canada’s expected -5 per cent decline in prime prices is taken as a reflection of an improving scenario. Everett-Allen says prime prices have been falling at a rate of 15 per cent per annum but shrinking inventories, along with a gradual adjustment to property market regulations, are fuelling a slow recovery in buyer sentiment. For Mumbai, India, the deteriorating economic environment that impacted market liquidity in 2019 is expected to quell buyer activity this year, resulting in a market price drop of -1 per cent. As for Hong Kong, Maggie Lee, senior director, head of residential agency, expects prime sales volume and demand to fall slightly because of market sentiment: “We foresee Hong Kong prime prices to have a minor correction in 2020.” The report also examines headwinds, noting that, in a late-cycle, low-yield environment prime buyers “are monitoring risk carefully”. For premium markets in Europe, Brexit dominates the thinking of Knight Frank’s global research teams. In Asia, it’s changing property market regulations and a local economic slowdown, and in North America, global trade disputes and an oversupply of luxury homes. In the Middle East, the volatility of commodity prices and geopolitical crises are expected to pose the greatest risk, while Australasia may be impacted by global and local economic slowdown. Gazing deeper into the crystal ball, the report dips into the events, trends and regulations that may influence prime residential markets in the coming years. Among those predictions, in markets where negative rates persist (such as Switzerland, Japan, the euro zone and Sweden), property will increasingly appeal as a means of generating a return. Is Hong Kong still the most expensive city to live in? Australian airline Qantas’ November 2019 testing of its new 19-hour, non-stop flight from London to Sydney — it may be operational as soon as 2022 — points to improved connectivity with the potential to reshape second home markets. Also expect greater regulation of the holiday homes rental market in cities attracting a high volume of tourists, and greener construction as developers and lenders reduce carbon footprints and overhaul commitments to sustainability to meet the ESG principles being prioritised by institutional investors. The report also lists the best-performing property markets over the past 10 years. Berlin is on top, having gained 145.7 per cent in the decade, followed by Vancouver (85.3), Sydney (69.8), Melbourne (64.1), Los Angeles (53), Miami (51.4), Paris (47.1), Hong Kong (45.8), Singapore (41.6), London (40.9), Madrid (35.4) and New York (23.5). BUYING GUIDE What you can buy for €2.23 million (US$2.45 million) in London: A choice of 82 top-class homes in Centre Point Residences, a renovated landmark of the West End. The property at the intersection of Oxford Street and Charing Road borders Covent Garden, Soho and Fitzrovia, and is a prime destination for living and socialising. As the tallest tower in the West End (over 34 floors), it offers unrivalled views of the city skyline. What you can buy for €5.5 million to €8.45 million in Berlin: A luxury flat in Crown Princes’ Gardens, a new development next to the Berlin State Opera directorship and the Crown Princes’ Palace. One of the German capital’s finest building projects is being created by six top architects, each applying their own particular expression of form to design 11 individual buildings in the development. Want more stories like this? Sign up here . Follow STYLE on Facebook , Instagram , YouTube and Twitter .