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Citi Private Bank
Prime Property Investing
Times are certainly good in many capital cities right now, as wealthy buyers from emerging markets and around the world drive up prices even as the markets around them wither and stagnate. We thought it would be good to compare some of the hottest capital city property markets by continent. This is the second report in the series, this time covering North America.
While the US has good house price indices, there is surprisingly little information allowing one to differentiate prime property from city to city, whereas in the UK Knight Frank and others run specific indices dedicated to exactly that; prime property in the capital London. Thank fully, Knight Frank's global wealth report in conjunction with Citi Private Bank comes to the rescue somewhat, because it gives an annual snapshot of property prices in the world's leading cities.
The Knight Frank wealth report tells us that Washington DC property prices grew by 5.6% in the year ending December 2009. We then look to the Case-Shiller year in review report for 2010, where we learn that the composite house price index shows a 12.7% growth in Washington DC prices in 2010. A subsequent Case-Shiller index announcement tells us that the composite index shows a 1.6% contraction in Washington house prices in 2011, and that prices were down 2.3% in the year ending February 2012.
However, every indication is that prime property in Washington DC, like elsewhere is on a different plane to the rest of the market, and has been growing strongly since 2009, but we have no data specifically on the prime property market to support these theories.
Again, we are hampered here by the fact that Ottawa is not one of the "in" cities, meaning we have no coverage of the prime property market by the likes of Knight Frank, which is currently covering a whole host of cities where wealthy people are creating a sort of global village of prime property markets the world over.
Whether this is a weakness or a strength depends upon your viewpoint. Yes, it makes it more difficult for us to compare for the purposes of this article, but on the other hand it also means price growth is slower, perhaps more sustainable, and property more accessible to those not in the super-rich club.
And Ottawa property prices certainly have shown some strong and stable growth during the last 3 years. According to Statistics Canada prices grew 1.8% in 2009. Then, in the year ending December 2009 prices grew a further 4.5%. In the year ending November 2011 another 1.7% growth, and a further 2.6% growth in the year ending February 2012. So, we probably have about 10% growth.
But what we have to remember is that house prices in Canada never crashed. In fact, according to the historical index of Terranet, the Ottawa index sees only a 4 basis points blip from 118.680 in October 2008 to 114.070 in April 2009, before growing strongly and surpassing its previous level by July 2009.
When it comes to which of these is the best place to invest in prime property it is a pretty close run fight, between the high growth of Washington DC and the long term sustainability of Ottawa. But in the theme of this article, the super growth of super-prime property In super-prime cities we have to pick Washington, simply because it is one of those super-prime cities, whereas Ottawa isn't. Canada is represented in the super-cities list by Vancouver and Toronto.
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*This page is provided for information purposes only and should not be construed as offering advice. IPIN is not licensed to give financial advice and all information provided by IPIN regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.