Luxury homes are the stuff of dreams for some individuals. These homes are known for being in the best location a city has to offer. Only the highest quality materials are used to finish luxury homes and no detail is left overlooked. A luxury home may include amenities like a spa, game room, movie theater, or indoor pool and maintaining privacy for the resident is of utmost importance in its design. Such features come with a hefty price tag and in some places, that price is higher than in others.
This article takes a closer look at the top 10 most expensive cities in the world for buying luxury homes according to the Prime Global Citizen Index of 2017. This index compares the cost of luxury homes across 41 cities, as well as price increases over 3, 6, and 12-month periods. For reference, the average price increase between June 2016 and June 2017 was 4.4%.
1. Melbourne, Australia
The 10th most expensive city in the world for luxury homes is Melbourne, Australia. This urban area, the second most heavily populated, is also known to have one of the highest costs of living in the country. According to statistics, the price tag for luxury homes doesn’t seem to be aimed at decreasing any time soon. For the 6-month period between December 2016 and June 2017, the average luxury home cost increased by 4.8% in Melbourne. A slightly lower increase of 3.3% was seen between March and June of 2017. The yearly average, however, was a 9.1% increase.
2. Cape Town, South Africa
The 9th most expensive city in the world for luxury homes is Cape Town, South Africa. The most expensive neighborhood in this city is Clifton, where quite a large number of luxury homes can be found. In Clifton, the average house price is approximately $2.53 million. The cost of luxury properties in this city continues to grow, with an average annual increase of 9.2% between June 2016 and June 2017.
3. Berlin, Germany
Berlin, the capital and most populated city of Germany, is the 8th most expensive city for buying luxury homes. This city has long been known to have expensive real estate prices. In fact, the most expensive luxury apartment (per square foot) in the country was sold in Berlin in 2016 at just over $2,100 per square foot. Those in the market for a luxury home in Berlin should not expect relief any time soon. Luxury home prices rose in this city by 9.7% between June of 2016 and June of 2017. In just the 6-month period between December of 2016 and June of 2017, the increase was recorded at 7.3%.
4. Madrid, Spain
The 7th most expensive city in the world for the luxury home market is Madrid, the capital of Spain and one of the most heavily populated cities in the European Union. Real estate investors have looked to this city as a relatively stable investment location during the recent global economic crisis and as a result, the number of luxury homes sold increased by 25% in 2015. The most expensive neighborhoods in Madrid include: Salamanca, Chamberi, and Jeronimo. The high demand for these homes has influenced the average purchase price, which saw a 10.7% increase between June 2016 and June 2017.
5. Sydney, Australia
Sydney has the largest population size in Australia and is the capital of the state of New South Wales. This city is known for its expensive real estate prices. In fact, a simple plot of undeveloped land here has been recorded as more expensive than a completed, luxury home Brisbane. Between 2014 and 2015, the prices for the entire real estate market in Sydney increased by 13.7%, in part due to high demand and insufficient supply. This increase is no exception in the luxury market, where the average home cost shot up 11.5% between June 2016 and June 2017.
6. Beijing, China
Beijing, the capital of China, has one of the most expensive real estate prices in the world, when compared to the average household income. This city has experienced soaring increases in average home prices over the last 7 years or so, an astonishing feat for a place where the real estate market was previously considered non-existent. Between June of 2016 and June of 2017, the price of luxury homes in this city increased by 15%. While this percentage is quite high, it actually represents a decrease from previous years when the highest annual growth was recorded at 22.9%.
Both the government and real estate developers have been focused on decreasing construction of luxury homes in this city. In the third quarter of 2016, the city reported no newly built luxury apartments. The supply of homes remained unchanged during that time, indicating a possible slowdown in demand.
7. Shanghai, China
Shanghai, China is the 4th most expensive location for purchasing luxury homes. The trend here is similar to that seen in Beijing. In other words, the prices continue to increase, but at significantly lower percentages than in previous years. The price increase of luxury real estate in this city was higher than that in Beijing. Between June 2016 and June 2017, Shanghai saw a 19.7% increase.
8. Seoul, South Korea
Seoul, the capital of South Korea, takes 3rd place on this list due to its extremely high increase in luxury home prices. The annual average between June of 2016 and June of 2017 increased at rate of 19.9%. Like other Asian cities, this percentage increase, although high, actually represents a slowing down in luxury home prices. Part of the reason for this slowdown is that the city has an over abundance of homes on the market and the government has recently implemented stricter mortgage lending and borrowing guidelines.
9. Toronto, Canada
Toronto, Canada is the only city on this list located in North America. Luxury real estate prices in this city saw a 20.7% increase between June of 2016 and June of 2017. Despite this higher-than-average increase, luxury home sales in Toronto have not slowed down. Instead, luxury home sales, with price tags of $4 million or more, nearly doubled between January and June of 2017.
10. Guangzhou, China
The highest luxury home price increase was reported in Guangzhou, the third most populated city in China. In this city, the cost of luxury real estate increased by a jaw-dropping 35.6%. Construction of these homes is continuing at a faster-than-average speed, with no signs of slowing down anytime soon.