Paris luxury property prices fall as hong kong keeps climbing

The property industry was surprised this week as Savills revealed that Paris luxury property prices fell by 3.4 per cent in the first half of 2012.

The firm's Autumn World Cities Review, published yesterday, saw Hong Kong remain the most expensive in the world, with prices growing by 7.4 per cent, closely followed by Moscow and Sydney, where values jumped by 5.5pc and 3.7pc respectively.

Hong Kong continues to "deft gravity", leaving prices a staggering 82 per cent ahead of London, adds Savills, with the "Old World" markets, such as the UK capital and New York, benefitting from safe haven status. But Hong Kong is now even further ahead than France's figurehead property market, as experts blame Francois Hollande's proposed taxes for the unexpected price drops.

"Paris is the biggest loser of 2012," says Savills," and faces a period of uncertainty.   The eurozone crisis continues to discourage investment in euro-denominated assets, and the market has been dealt a double blow by President Hollande's proposed increases to taxes on high end property and investor gains.  Further price falls now seem unavoidable in the French capital, and London is the potential beneficiary as international money seeks an alternative haven within the geography of Europe, but outside the eurozone."

"Emerging markets, and Chinese buyers in particular, still have the potential to move other world city markets," says Yolande Barnes, director of Savills Global Research.  "Last year we said that the unleashing of high net worth Chinese investor monies could boost London's prime markets by 15% and the same must be true of other top cities, but this will require the relaxation of currency export controls and overseas ownership restrictions.

"By contrast, China's lead world city, Shanghai, will need to see its market adjust to a more sustainable domestic consumption model in the future before significant price growth can resume."

Barnes concludes: "We identified New York as a buy opportunity in 2011, because it looked good value and offered ‘old world' stability.  Recent steady price growth, low mortgage rates, a shortage of supply in the upper tiers of the market, and solid and growing overseas demand, suggest that it is now be poised for a strong recovery."