Global luxury house prices continue to rise steadily, with average Q3 quarterly prices across Knight Franks Index's basket of 46 cities up by 2.1%

Eleven cities saw prices fall over the past three months, down from 14 in Q2, while 63% of cities saw positive quarterly price growth 

Manila is number one for price growth, overtaking Dubai, and even the five of the weakest markets for annual price growth saw quarterly price growth.

The full list is here

Liam Bailey, global head of research at Knight Frank said: "The improvement in average annual house price growth will be welcomed by prime market homeowners but shouldn't be overstated. Higher rates mean we have moved into a world of lower asset price growth - and investors will need to work harder to identify opportunities for outperformance to secure target returns."

The average growth rate of 2.1% for the 12-month period to September was up from the 1.6% recorded in Q2, and the recent low of 0.2% seen in Q1.

The recovery in annual pricing confirms that global housing markets are displaying signs of stabilisation, despite sharply higher mortgage rates. 

However, while 67% of markets saw prices rise over the year, only 63% saw an increase over the quarter, indicating lingering uncertainty, primarily due to the potential for further interest rate hikes.

Ongoing uncertainty over inflation and interest rate risks continues to weigh on all levels of the global housing market, including the luxury segment, and is likely to limit price growth in the medium term.

Despite a modest 2.1% price increase this quarter, Manila claimed the top spot in our ranking with a 21.2% annual rise in prices.

Manila's performance is attributed to strong domestic and foreign investments.

Dubai, with 15.9% annual growth, has moved into second position in its ranking due to a slowing in quarterly growth from 11.6% in Q2 to 0.7% in Q3.

Shanghai secures the third spot with 10.4% annual growth in our rankings.

In Q2, Stockholm's property market saw strong quarterly and annual growth. However, this trend faces challenges in the quarterly data, showing a sharp 7.7% decline in property prices. 

Similarly, Tokyo soared to second place in the rankings last quarter, with substantial annual and quarterly growth, but it has now fallento 29th place, with prices declining by 12% quarterly.

In the Asia-Pacific region, Seoul's annual growth significantly improved, moving the city from 39th place in Q2 to 7th place this quarter in its ranking. 

As anticipated, The Bank of Korea maintained its 3.5% base interest rate in October, which boosted market demand. 

Singapore's market has started to experience annual price declines, attributed to the impact of higher stamp duties on foreign buyers.

Meanwhile, Hong Kong continues to see declining prices, with a 0.6% drop in the quarter leading to a 1.7% annual decrease.

Australian markets all manage to deliver positive annual growth, buoyed by strong demand and low supply, but negative quarterly movements in Perth and Melbourne point to limits to growth in the current cycle.

The United States dominates the lower rankings of the index, with San Francisco experiencing a 9.7% annual price decrease and New York a fall of 4%.

The trend for wealthy investors to target Florida continues, benefitting the Miami market, where demand has driven a 0.9% annual price increase.

London's prices continue to decline, with a marginal 0.7% drop in the quarter and a 1.7% decrease annually. Despite the relative stability of prime markets this year, London prime prices are not immune to the impact of rising interest rates and broader economic and political uncertainty.

These factors are expected to continue exerting pressure on prices in the short term.

In its concluding outlook, Knight Frank said: "With inflation edging lower, and interest rates largely held by central banks, market demand for residential property has improved in several markets, contributing to improvements in our index results.

"That said, this revival in demand is fragile and could be pushed off course if inflation surprises on the upside. A more sustained upswing in demand and pricing will only be achieved once rates begin to move lower - which is unlikely to take place before mid-2024."