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Global luxury home prices turned negative for the first time since 2009, Knight Frank reported.
Its Prime Global Cities Index dipped 0.4% annually in the first quarter after climbing 3% in the fourth quarter.
Prices will likely continue seeing downward pressure on prices for the next few quarters, Knight Frank added.
The price of luxury homes in the world’s top markets has turned negative for the first time since 2009, according to real estate tracker Knight Frank.
The firm’s Prime Global Cities Index, which covers prices in 46 leading markets, dipped 0.4% annually in the first quarter.
That’s down from a 3% increase in the fourth quarter and continues a sharp reversal from the peak in late 2021, when prices were up by 10.1%.
“The slowdown in growth has overwhelmingly been driven by sharply higher interest rates following recent tightening in global monetary policy,” Knight Frank said.
Although two-thirds of prime markets appreciated in the first quarter, steep price slides in the remaining markets caused the overall index to decline.
In the first quarter, 16 out of the 46 tracked markets declined, led by drops in New Zealand’s top cities. Meanwhile, Dubai and Miami saw double-digit increase.
Since 2020’s first quarter, prices in the Middle Eastern city have jumped 149% as a result of structural change in the country’s market.
Aggressive monetary policy worldwide has caused a surge in interest rates, which has brought up mortgage rates. And an expected pause in tightening may not bring much relief.
“While the Federal Reserve and other central banks may be closing in on peak rates, it is likely that even prime housing markets will experience continued downward pressure on prices for the next few quarters,” Knight Frank said.