Dubai’s high-end home market is set to lead the world in property price appreciation in 2023, a year that is now on track to perform worse than predicted six months ago, according to a report Tuesday from Knight Frank.
Across the luxury markets of the 25 major cities analyzed by the real estate agency and consultant, prime prices are set to rise on average by 2% next year, down from the 2.7% Knight Frank forecast in June.
“At a time when homeowners are having to contend with the unpredictability of soaring inflation, the rising cost of debt and higher taxes, the landscape in most global cities is now shifting,” Kate Everett Allen, head of global residential research at Knight Frank, said in the report, which noted that it would still put aggregate growth in 2023 above that recorded in six of the last 10 years across Knight Frank’s prime residential markets.
Indeed, prime prices would need to drop by 30% to 40% in some cities to return to their pre-pandemic levels of 2019, the report added.
Dubai, with predicted annual price growth of 13.5% next year, leads the forecast for 2023.
Miami follows at a distant second, with expected gains of 5%, and Dublin, Lisbon, Madrid, Los Angeles, Paris and Singapore are all anticipated to log 4% price increases across their high-end markets.
New York ranked jointly with Tokyo, both at 13th place, with price growth of 2% in the cards.
London and Seoul, meanwhile, were the duo at the end of the table. Both cities are predicted to see their prices drop by 3% next year.
Knight Frank
Of the cities tracked, 11 are now expecting to see weaker price growth in 2023 than Knight Frank forecast earlier in the year; for 10, the outlook has remained unchanged; and four of the 25 cities—Zurich, Vancouver, Paris and Singapore—are now expected to see stronger price growth in 2023 than originally thought.
“With substantial headwinds facing the global economy, a more severe market slowdown may have been expected,” Liam Bailey, global head of research at Knight Frank, said in the report. “However tight supply, the search for income from investors and currency opportunities will, we believe, put a floor under pricing in prime markets.”
Cash buyers, short supply and global appeal are helping Miami’s real estate market defy the slowdown being witnessed across the rest of the U.S., according to a report Tuesday from the Miami Association of Realtors.
Last month, pending home sales skyrocketed from December in Miami-Dade County. Deals were up 35.5% month over month, from 1,688 in December to 2,288 in January, marking the first month-over-month rise of total pending sales since August 2022, the report said.
“Miami is a unique market because of our high percentage of cash buyers, surging migration and soaring number of international and domestic buyers,” Ines Hegedus-Garcia, chairman of the association, said in the report. “Miami is shielded in a sense from interest rate hikes because of those fundamentals. While other major U.S. markets are seeing decreasing prices, the Miami market is still very strong and still appreciating.”
As of Feb. 16, the most recent data available from finance giant Freddie Mac, the rate for a 30-year fixed-rate mortgage averaged 6.32%. This time last year, the rate stood at 3.92%, and in October, reached a high of 7.16%.
The median price for a single-family home, meanwhile, increased 4.8% year-over-year to $545,000 in January, the 134th consecutive month—equating to more than 11 years—that prices have risen in Miami-Dade County, the report said.
Existing condo median prices increased 11.1% year-over-year, from $360,000 to $400,000 in January.
At the same time, the number of active listings on the market were down 48.7% compared to pre-pandemic levels.
“South Florida is still in a seller’s market,” Gay Cororaton, the association’s chief economist, said in the report.
“Homes are in short supply as the area continues to see stronger job growth than nationally and sustained migration, especially from retirees and relocating workers and companies,” Ms. Cororaton said. “Home buyers should take into consideration that home prices are more likely to keep rising than to decline given the shortage of homes on the market and the decline in new home construction.”
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