Which city has the most bubble-tastic luxury property market?

Joining the glamorous ranks of cities you can no longer afford to live in. Image: ROMEO GACAD/AFP/Getty.

Prime property – expensive flats in prestigious bits of cities – is all the rage. Not as somewhere to live, you understand (do me a favour), but as an asset class. Posh flats are an increasingly popular place for the rich to stash their money.

But which city, we hear you cry, has the fastest growing prime property prices? Where, CityMetric’s well-heeled readers demand to know, should we put our money?

One might think, from all the talk of rich Russian oligarchs buying up chunks of Mayfair, that the answer would be London. One would be wrong. According to Knight Frank, in the year to June, prime property prices in London rose by a measly 8.1 per cent: in the ranking of 32 cities accompanying the research, the British capital barely scraped the top 10.

You’d be much better investing your riches in New York, which ranked 3rd, with prices up by 18.4 per cent. Even better would be Dublin, which ranked 2nd, after prices rose by 23.5 per cent in a year. (Investing money in the Dublin housing market has always been a good idea in the past.)

Topping the charts, though, is Jakarta, pictured above. The Indonesian capital may not spring to mind as a luxury destination. In the last year, though, the cost of its prime property – that is, the top 5 per cent of its real estate market – has risen by 27.3 per cent. Here’s the full ranking.

So what’s driving this vertiginous climb? Liam Bailey, Knight Frank’s head of residential research, identifies the usual culprits: “very strong demand” and “limited supply”. This is fantastic for investors who own Jakarta apartments, but it’s not so great for the locals.

So unsurprisingly the authorities have been attempting to slow things down. In September 2013, Bank Indonesia passed a regulation reducing the maximum loan-to-value ratios on investment properties. That required buyers to pay deposits of at least 40 per cent on second properties, and 50 per cent on any beyond that.

Such measures have been known to work. Singapore has been gradually reducing loan-to-value ratios to cool its own property market for the last five years. In 2013, it also introduced an additional 15 per cent stamp duty for foreign buyers who already own homes.

As a result, the luxury market – many of whose occupants are covered by these criteria – hasn’t seen significant growth since mid-2010. This year, prices fell by 7.7 per cent, placing it at the very bottom of Knight Frank’s ranking.

Here’s a chart comparing prime property prices in Singapore with those in other major Asian cities:

So, it is possible to calm a property market down – but you have to really want to do it. Beijing introduced its own cooling measures in 2013 – but they were swiftly rolled back again, after prices fell rather quicker than the central government had hoped. The US-based National Interest magazine accused the city of having a “housing addiction”.

As ever, there’s a tension between the need to stop the market from turning into a bubble – and the benefits high property prices can offer to their powerful owners.

 
 
 
 

CityMetric is now City Monitor! Come see us at our new home

City Monitor is now live in beta at citymonitor.ai.

CityMetric is now City Monitor, a name that reflects both a ramping up of our ambitions as well as our membership in a network of like-minded publications from New Statesman Media Group. Our new site is now live in beta, so please visit us there going forward. Here’s what CityMetric readers should know about this exciting transition.  

Regular CityMetric readers may have already noticed a few changes around here since the spring. CityMetric’s beloved founding editor, Jonn Elledge, has moved on to some new adventures, and a new team has formed to take the site into the future. It’s led by yours truly – I’m Sommer Mathis, the editor-in-chief of City Monitor. Hello!

My background includes having served as the founding editor of CityLab, editor-in-chief of Atlas Obscura, and editor-in-chief of DCist, a local news publication in the District of Columbia. I’ve been reporting on and writing about cities in one way or another for the past 15 years. To me, there is no more important story in the world right now than how cities are changing and adapting to an increasingly challenging global landscape. The majority of the world’s population lives in cities, and if we’re ever going to be able to tackle the most pressing issues currently facing our planet – the climate emergency, rising inequality, the Covid-19 pandemic ­­­– cities are going to have to lead the way.

That’s why City Monitor is now a global publication dedicated to the future of cities everywhere – not just in the UK (nor for that matter just in the US, where I live). Our mission is to help our readers, many of whom are in leadership positions around the globe, navigate how cities are changing and discover what’s next in the world of urban policy. We’ll do that through original reporting, expert opinion and most crucially, a data-driven approach that emphasises evidence and rigorous analysis. We want to arm local decision-makers and those they work in concert with – whether that’s elected officials, bureaucratic leaders, policy advocates, neighbourhood activists, academics and researchers, entrepreneurs, or plain-old engaged citizens – with real insights and potential answers to tough problems. Subjects we cover include transportation, infrastructure, housing, urban design, public safety, the environment, the economy, and much more.

The City Monitor team is made up of some of the most experienced urban policy journalists in the world. Our managing editor is Adam Sneed, also a CityLab alum where he served as a senior associate editor. Before that he was a technology reporter at Politico. Allison Arieff is City Monitor’s senior editor. She was previously editorial director of the urban planning and policy think tank SPUR, as well as a contributing columnist for The New York Times. Staff writer Jake Blumgart most recently covered development, housing and politics for WHYY, the local public radio station in Philadelphia. And our data reporter is Alexandra Kanik, whose previous roles include data reporting for Louisville Public Media in Kentucky and PublicSource in Pittsburgh, Pennsylvania.

Our team will continue to grow in the coming weeks, and we’ll also be collaborating closely with our editorial colleagues across New Statesman Media Group. In fact, we’re launching a whole network of new publications, covering topics such as the clean energy transition, foreign direct investment, technology, banks and more. Many of these sectors will frequently overlap with our cities coverage, and a key part of our plan is make the most of the expertise that all of these newsrooms combined will bring to bear on our journalism.

Please visit citymonitor.ai going forward, where you can also sign up for our free email newsletter.


As for CityMetric, some of its archives have already been moved over to the new website, and the rest will follow not long after. If you’re looking for a favourite piece from CityMetric’s past, for a time you’ll still be able to find it here, but before long the whole archive will move over to City Monitor.

On behalf of the City Monitor team, I’m thrilled to invite you to come along for the ride at our new digs. You can follow City Monitor on LinkedIn and on Twitter. If you’re interested in learning more about the potential for a commercial partnership with City Monitor, please get in touch with our director of partnerships, Joe Maughan.

I want to thank and congratulate Jonn Elledge on a brilliant run. Everything we do from here on out will be building on the legacy of his work, and the community that he built here at CityMetric. Cheers, Jonn!

To our readers, on behalf of the City Monitor team, thank you from all of us for being such loyal CityMetric fans. We couldn’t have done any of this without you.

Sommer Mathis is editor-in-chief of City Monitor.