Cape Town - Only Vancouver and Shanghai managed to beat Cape Town as top prime price performers in the second quarter of 2016, according to the latest Prime Global Cities Index by international property consultancy Knight Frank.
According to Knight Frank, the index enables investors and developers to compare the performance of prime residential prices across key global cities. Prime property corresponds to the top 5% of the wider housing market in each city. The price change is calculated in each city’s local currency.
Cape Town's annual property price growth reached double figures in the year to June 2016. Previous price changes for Cape Town were significantly less. December 2015 to June 2016 showed a 5.6% change and March 2016 to June 2016 a 3% change.
"When compared to the 16.1% change in the 12 months from June 2015 to June 2016, it can only mean extremely positive things for the local industry’s growth," according to Knight Frank.
Toronto, Melbourne and Sydney were the other top performers to show annual price growth in double figures in the year to June, according to researcher Kate Everett-Allen.
She said the majority of the top ten ranking cities on the index have been on the receiving end of new cooling measures in the last 12 months. These include interest rate hikes fees for foreign buyers, higher land taxes, or new rules on the number of second homes that can be acquired. Therefore, she is of the opinion that a year from now the top ten cities ranking could look very different.
According to the latest index, Hong Kong has eclipsed Taipei to take the title of weakest-performing residential market. Prime prices slipped 8% in the year to June as supply increased and concerns over the slowdown in the local economy persisted.
As for London, Everett-Allen prime explained that prices were already softening prior to the EU referendum in June as the city absorbed the fifth change to stamp duty rates in as many years. Annual price growth has slowed from 8.3% to -0.6% over the five year period.
"Although uncertainty persists some clarity over the country’s leadership and the Bank of England’s decision to leave the base rate unchanged this month has delivered a hint of confidence in the UK economy," she added.
Analysis by world region shows Australasia leads with prices rising by 11% on average followed by North America (10%), while Africa came in at 9%.
"The global economy is still in a precarious state lacking any real engine of growth. Low oil prices, deflationary concerns in the eurozone, uncertainty surrounding the impact of the UK’s Brexit decision and weaker-than-forecast US gross domestic product (GDP) figures represent just some of the challenges on the global economic landscape," concluded Everett-Allen.
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