Luxury house prices across the world showed further signs of stabilization during the third quarter. 

Average annual prices rose 2.1% during the year to September across the 46 markets covered by the Knight Frank Prime Global Cities Index, which is the strongest rate of growth since Q3 2022 (see chart). Though central bankers are eager to make the point that interest rates will remain higher for longer, the decision by many to pause their tightening cycles has boosted sentiment. Meanwhile, a lack of stock in many markets is putting a floor under values that would otherwise soften further.

That said, this revival in demand is fragile and could be pushed off course if inflation surprises on the upside. A more sustained upswing in demand and pricing will only be achieved once rates begin to move lower – which is unlikely to take place before mid-2024. For a full breakdown of which cities are outperforming and why, see the report.