The Lopsided Market for Luxury Properties [Chart]

Which world-class cities are the ultra rich scrambling to get into?

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The global market for high-end luxury properties is a volatile one.

For example, during the tumultuous year of 2009, there was an astonishing 97 percentage point differential in the price changes of high-end real estate. Some markets may have been up 30%, but others were down over 60% – that’s a wild margin for multi-million dollar properties in some of the most world-class cities in the world.

This is according to the latest iteration of the Wealth Report, an annual publication by the global real estate consultancy Knight Frank that focuses on the world’s ultra-rich.

High-end Real Estate in 2015

The market for luxury properties last year was obviously less volatile than the aforementioned example, however the spread is still significant.

In Vancouver, which is currently engulfed in a real estate mania that we covered in-depth yesterday, luxury properties jumped up in price by 25% throughout 2015. This is not an exception to the trend. Royal Lepage, another realtor, covered Canadian luxury markets in more depth, finding that properties increased in price by a total of 125% from 2005 to 2015. That compares to 69% increases in Toronto over the same period, and 58% increases in Montreal.

The biggest decrease in the price of luxury real estate was in Lagos, Nigeria. The African metropolis of 16 million is the continent’s largest city, as well as the fastest growing city in the world. There, high-end properties divebombed by -20%.

In terms of more so-called “world-class” cities, the “Paris of South America” – Buenos Aires – saw the largest decline of -8.0%. Knight Frank notes this decline is based mainly because of currency and affordability issues. The market there could be an interesting one to watch for awhile, as new Argentinian president Mauricio Macri recently took the country’s reins in December 2015.

The North American Market

San Francisco was a distant second place from Vancouver, with an increase in high-end property values of 10.9%. Toronto was up 8.0%, while Los Angeles and New York both held modest gains of 4.7% and 2.4% respectively.

Chicago was the worst performing North American city in Knight Frank’s index with a 0.0% price change in luxury properties throughout 2015.