An international ranking of prime property prices in cities around the world compiled by the property company Knight Frank shows Madrid in 34th place out of 46, with only London below Madrid in Europe.
On the whole, prime property prices in the world’s leading cities have jumped over the course of the pandemic, up 9.5% in the year to September, according to research by Knight Frank. The chart above illustrates how prices declined at the start of the pandemic, before recovering at the end of 2020, and taking off in the course of this year.
Miami, the capital of Florida state in the US is the city where house prices have risen the most over 12 months to the end of Q3 2021, up 26.4%, and Jakarta, the capital of Indonesia, is where prices have fallen the most, down 4.25%. The Spanish capital Madrid, representing Spain in this index, wias in 34th place with prices up a modest 2%. The only European city lower than Madrid was London, up 0.7%.
Knight Frank defines prime property as “The most desirable and expensive property in a given location, generally defined as the top 5% of each market by value,” and points out that prime markets often have a significant international bias.
Explaining Miami’s surging property prices, the report says that “the hunt for larger accommodation, coastal living, and Florida’s low taxes acted as a key draw for a new breed of remote workers in the US.”
Low interest rates and global liquidity are helping the fuel the rise in prime property prices, but higher interest rates won’t be a problem because “we expect the prime market to be better insulated given the sector’s large proportion of cash purchasers,” write the authors.
Are fast rising prime property prices a good thing? For prime vendors, of course, but not for anyone else. A 2% increase in Madrid sounds reasonable, whilst a 26% increase in Miami sounds frothy.
You could argue that fast-rising prime property prices might be a good thing if they show a city is well-managed, but fast rising prices also tend to encourage speculation, which is rarely a good thing in the long run.
You can see the full ranking below.