• After two years of growth the world’s prime markets look set to cool in 2012
• Our forecast for 2012 is evenly split with 44% of the cities monitored forecast to see price falls, 44% likely to experience price rises and 12% expected to remain unchanged
• Given the global economic turmoil it might seem surprising we are forecasting prices rises in 44% of the cities monitored. In many of these cities the critical factor is a lack of quality new supply. We expect this to be particularly evident in London, Paris, Moscow, Nairobi and Kuala Lumpur.
• In those cities forecast to see price growth this will be underpinned by the flow of capital from the world’s troubled regions and a desire amongst the wealthy to target property and other real assets over financial products
• Over 60% of the Asian cities monitored are forecast to see price falls in 2012 as government measures aimed at dampening speculative demand start to take effect.
• The Eurozone crisis is considered a high risk for 60% of the cities covered. Political and security issues present the greatest risk to the housing markets in the Middle East and Africa.
• Interest rates, high inflation and consumer debt represent the smallest risk to the world’s luxury housing markets reflecting the affluent, more equity-rich buyer profile for this Liam Bailey, head of research at Knight Frank commented: “There are three key themes which will determine the performance of prime city markets in the short- to medium-term; the scale of global wealth generation, the ongoing search for ‘safe-haven’ investments and the growing divide between the prime markets in the West and the rest of the world.