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Top 10 luxury real estate markets around the world

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The priciest real estate in the world is just getting pricier.

According to the 2015 Prime Global Cities Index, recently released by the London-based real estate consultancy Knight Frank, luxury properties are on average 46 percent more expensive globally than they were back in the second quarter of 2009, when the index hit its lowest point of the Great Recession.

The company defined "luxury" in several different ways, according to Jonathan Miller of the New York-based Miller Samuel Appraisers and Consultants, who provided data for Manhattan, Miami and Los Angeles. He believes luxury is best measured by looking at the top 10 percent of transactions during a given period.

But for Tokyo and other select markets on this list, he said, Knight Frank used different measurement strategies that were better suited to the individual areas.

The top 10 international markets for luxury price growth show relatively strong geographic diversity, with North America, Asia, Europe and Australia all making appearances. However, and perhaps unsurprisingly, North American markets steal the show. San Francisco, Miami and Vancouver were all in the top five, earning double-digit percentages of price growth year-over-year.

California actually made the list twice. San Francisco, largely due to its booming tech industry, came in at No. 1 with price growth over 14 percent. Los Angeles earned the No. 9 spot and was tied with Dublin for price growth at 8 percent.

Knight Frank compared these trends with the findings from its annual Wealth Report and drew a few conclusions about what might affect global luxury real estate markets in the next year.

Luxury buyers are likely to make future purchase decisions, according to the company, by balancing what they perceive is the globalization of markets (based on factors like wealth creation and improved connectivity) with how they perceive the markets' protectionism (based on factors like foreign buyer restrictions and capital controls). That means buyers will be looking for high-end, cosmopolitan locales that won't restrict their purchase power.

Naturally, a city's local job market plays a big role in its globalization and real estate growth. When urban job markets change and grow, their housing markets change and grow, too. Knight Frank recently addressed the potential impact of what it calls emerging "Global Cities" on the economy, large markets where creative, knowledge-based workforces are spurring demand.

Right now, the global economy is starting to favor places where creative knowledge workers, rather than industrial ones, are gathering in droves -- places like San Francisco and Sydney, Australia, which experienced over 7 percent housing price growth this year.

"San Francisco in particular has benefited from the tech boom in a very extreme way," Miller said. "It has some of the highest purchase prices in the country on this index."

Here are 10 soaring housing markets around the world where luxury real estate is reaching new heights.

Sydney, New South Wales, Australia

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Price increase: 7.4 percent*

Sydney, Australia, coming in at the bottom of this list, is struggling with high demand for housing and low supply.

It's the ranking that surprised Miller the most.

"If you would have asked me who would be at the top of this list, I would have thought Australia -- Sydney, maybe Melbourne," he said. "They have a significantly overheated housing market. It's of great concern. But I believe what's happening is that the rate of growth is cooling. They're applying constraint to growth -- at least they're trying."

The continent Knight Frank refers to as "Australasia," which includes Australia and the neighboring Indonesia, Papua New Guinea and New Zealand, experienced the second-highest luxury price increases as a whole year-over-year at 7.3 percent, about 1 percent less than North America.

*Source: Knight Frank data from 2015

Los Angeles, California

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Price increase: 8 percent

The second California city to make the list, Los Angeles comes in at No. 9, although it's technically tied with Dublin, next up on the list, for year-over-year price increases. Current median home values in Los Angeles are about half what they are in San Francisco at about $535,000, according to Zillow. But luxury prices are climbing, due in part to the prevalence of all-cash sales and their weakening effect on housing supply.

Dublin, Ireland

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Price increase: 8 percent

Dublin is the only European city to make the top 10, coming in at No. 8, which isn't surprising considering the continent experienced a 0.2 percent price decline year-over-year.

"Europe is grappling with the euro, with Greece, and they're on a slippery slope, flirting with recession," Miller said. "It's a very weak economic situation for the continent, and it has several years of weak activity in front of it given its economic condition."

In the last three months of Knight Frank's report, Dublin only had a 0.6 percent luxury market price increase, but year-over-year the capital of Ireland is tied with Los Angeles at 8 percent.

Tokyo, Japan

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Price increase: 8.1 percent

Tokyo is starting to look like a really great city for both foreign and domestic real estate investors. Snagging relatively inexpensive properties now could result in big yields if prices continue to rise. After all, the bustling Japanese capital came in at No. 7 for price increases in 2015. However, prices fell by more than 2 percent during the last three months reported by Knight Frank's study, which may be a red flag.

Tel Aviv, Israel

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Price increase: 10.2 percent

Limited supply, major demand and a growing tech industry are converging in Tel Aviv to produce a boom that earns it the No. 6 spot on Knight Frank's list. Lux properties providing views of the Mediterranean are generating a lot of the high-end price growth, according to Curbed, but homes in the countryside don't seem to be too much cheaper, with extravagant mansions selling for more and more in recent years.

Jakarta, Indonesia

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Price increase: 11.2 percent

Jakarta's price growth between September 2014 and March 2015 was nearly identical to San Francisco's -- just one-tenth of a percentage point lower. However, the large city on the Ciliwung River didn't grow quite as fast year-over-year, coming in at No. 5 on this list.

Jakarta, which has seen its housing market boom due in part to its growing number of high-net-worth residents, was No. 1 in 2014 and 2013.

Vancouver, British Columbia, Canada

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Price increase: 11.8 percent

The strengthening U.S. economy has spurred demand for British Columbia's natural resources, like lumber, according to Knight Frank. This, on top of rampant bidding wars and the fact that foreign buyers continue to see Vancouver as a safe property investment, has increased luxury home prices year-over-year, earning the major city the No. 4 spot on this list. Low inventory has prompted some concern from local real estate professionals, who worry that overpaying and buyer fatigue may continue.

Miami, Florida

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Price increase: 12.2 percent

Miami's home prices may only have gone up by around 12 percent in the last year, but its increases over the last six months of this study are higher than any other city on Knight Frank's list. Between September 2014 and March 2015, Miami prices increased by a whopping 22.4 percent. No other city managed a percentage increase over 20. Demand for lux Miami real estate has gone up, due in part to interest from foreign investors.

In a previous 2015 report, Knight Frank called Miami the sixth-most-important city for high-net-worth individuals.

Bengaluru, Karnataka, India

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Price increase: 13.6 percent

The prime housing market in Bengaluru (Bangalore), India, is growing for primarily the same reason as San Francisco: It's attracting a lot of tech and creative talent due to an influx of new firms. As those industries grow, the number of high-net-worth individuals in the area is increasing. The number of affluent locals with wealth over $30 million is set to more than double in the next decade, according to a Knight Frank estimate.

San Francisco, California

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Price increase: 14.3 percent

It's no secret that Silicon Valley tech companies have transformed the San Francisco housing market, raising values through the roof. The median home value in the area is currently above $1 million, according to Zillow, and if recent trends reported by Knight Frank are any indication, they probably won't be dropping any time soon.

The Golden Gate City has the fastest-growing home prices in the entire world, more than earning its top spot on this list.

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