The Financial Crisis Leads to a Fall in Luxury Home Prices

Business Week, quoting Knight Frank's head of residential research, Liam Bailey, says wealthy individuals delayed purchasing in 2009 because of concerns over the global economy. Second homes suffered the biggest falls in value declining by an average 12% whereas cities tended to perform better because they are necessity driven according to Mr Bailey.

The biggest declines in property values were in Dubai, in parts of Portugal's Algarve, the Spanish island of Mallorca and in Dublin. Monaco remained the most expensive market for the second year in a row with London and Paris in second and third place respectively.

China, Hong Kong, Singapore and Jakarta saw values increase with prices in Shanghai up by 52% in the year making it the 13th most expensive luxury-home location among cities. China is taking steps to rein-in property prices imposing an anti-speculative property tax in January and increasing the scale of deposits banks are required to set aside as reserves in order to reduce lending.