PRIME CITIES UPDATE
The great moderation continues. Two years ago, prime prices were rising at an average rate of 4.3% per annum; growth has now slowed to 1.3%.
The Prime Global Cities Index, which tracks the movement in luxury residential prices across 45 cities globally, registered its lowest rate of annual growth since the final quarter of 2009, when the world was in the grip of the financial crisis. What’s changed? Although still rising, the rate of wealth creation globally slowed in 2018. The last six months saw political and economic headwinds intensify. In the first quarter of 2019, the threat of a global trade war loomed, uncertainty surrounding Brexit peaked and the IMF projected that 70% of the world’s economies would see a slowdown in growth in 2019.
Add to this, the rising cost of finance – the US alone has seen nine rate rises since December 2015 influencing not just the US but also the 13+ currencies pegged to the US dollar - and a moderation in prime sales and hence prices was expected.