Cape Town is not the only city struggling with luxury property price growth

The Prime Global Cities Index, which tracks the movement in luxury residential prices across 46 cities, increased by 1.4% in the year to June 2019, up marginally from 1.3% in March 2019 – but still significantly lower than its four-year average of 3.8%.

The index comes from property consultancy Knight Frank, which tracks the movement in luxury residential property prices across a number of global cities including Cape Town.

Berlin leads the index, although its rate of annual growth has slowed from 14.1% in March 2019 to 12.7% in June 2019. Frankfurt, by comparison, has seen its annual price growth increase from 9.6% to 12.0% over the same period. Still, the German capital has recorded the strongest price growth rate globally, with a 12% increase year-on-year.

It is the second year in a row that Berlin has beaten other prestigious cities such as Moscow, Geneva and Paris, noted Bloomberg.

In total, six European cities featured in the index’s top ten: Berlin (1), Frankfurt (2), Geneva (5), Madrid (6), Paris (7) and Zurich (8).

Some 35 of the 46 cities tracked by the index (76%) registered price growth in the year to June 2019. Of the eleven that saw prices decline year- on-year, Istanbul (-9.9%) and Vancouver (-13.6%) were the weakest markets, the report said.

Cape Town, the jewel in South Africa’s property crown, where luxury property on the Altantic Seaboard can still reach towards R100,000 for a square metre, is ranked 22nd on the index. The coastal city has seen property prices climb a mere 2.1% year-on-year, but decline by 0.1% over the past three months.

Over the last quarter, sellers in Cape Town’s swanky Atlantic Seaboard and Constantia Upper areas have reduced their asking prices by up to R10 million, sales data from Seeff showed.

And a quarterly property survey from FNB, meanwhile, showed that prices on the Atlantic Seaboard were down 3.7% year-on-year as foreign buyers begin to lose interest in Cape Town, amid a rise in emigration among the country’s wealthy.

In mainland China, tier 1 cities such as Beijing (4.5%) and Guangzhou (2.7%) saw prime price growth strengthen in the first half of 2019 as optimism grew surrounding the potential relaxation of housing policies, even though authorities reiterated their stance against speculation.

In Hong Kong (0%), the opening of various cross-border infrastructure projects, which should boost economic links in the Pearl River Delta over time, failed to counteract immediate concerns over the US/China trade war and political discord,” Knight Frank said.

“Singapore’s prime market (0.9%) remains subdued as buyers adjust to the latest round of regulations, yet despite this, a number of record sales prices have been achieved so far in 2019.

“Sluggish economic growth explains the wave of interest rate cuts evident in the last three months as policymakers try to stimulate growth. Much hinges on the next three months with stronger headwinds on the horizon we expect the index to moderate further in the second half of 2019 before strengthening in 2020,” the property group said.

Read: This remarkable piece of land is up for sale on the Cape Coast

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Cape Town is not the only city struggling with luxury property price growth