New York Was the Worst-Performing Global Luxury Market in the First Quarter

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BY FANG BLOCK | ORIGINALLY PUBLISHED ON MAY 5, 2021 | MANSION GLOBAL

New York City’s luxury property market had the biggest annual price decline among major world cities during the first quarter of the year, while prime prices globally rose at their fastest rate since 2017, according to a Knight Frank report released Wednesday.

During the first three months of 2021, luxury prices—defined as the top 5% of the market—in New York fell 5.8% year over year, the largest decline among the 46 global key cities tracked by Knight Frank’s Prime Global Cities Index.

On a quarterly basis, New York’s luxury prices were down 1.6% compared to the fourth quarter of 2020. The decline slowed down from the fourth quarter, when the luxury price was 2% lower than the third quarter.

Overall, Knight Frank’s Prime Global Cities Index rose 4.6% year over year in the first quarter, the fastest pace recorded since the fourth quarter of 2017. Nearly a quarter, or 11 out of the 46 cities, registered double-digit annual price growth, led by three Chinese cities, Shenzhen (18.9%), Shanghai (16.3%) and Guangzhou (16.2%).

“Low mortgage rates—record lows in some markets—tight stock levels and a desire for space post-lockdown have led to an uptick in demand,” Kate Everett-Allen, head of International residential research at Knight Frank, said in the report.

Vancouver ranked fourth with a 15% price increase, followed by Seoul, where prime prices rose 14.8% year over year in the first quarter.

However, some other top luxury markets, including Paris (-3.7%), Dubai (-3.6%), London (-3.5%), and Hong Kong (-3.1%) joined New York as the worst-performing cities.

In total, 15 cities had a negative price growth rate in the first quarter.

“There are a combination of factors behind each city's negative growth, from long and stringent lockdowns to a backlog of supply and from higher taxes to policy constraints,” Ms. Everett-Allen said. But in most cases, “we expect a return to growth in the second half of 2021 once travel bans ease, cross border transactions resume and consumer confidence ticks upwards.”

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