Two of the world’s strongest residential real estate markets are located in Australia according to new research from global property consultancy firm Knight Frank.

Released last week, Knight Frank’s latest Prime Global Cities Index, which tracked house price growth in the year to June 2016, revealed that both Melbourne and Sydney are among the top 10 growth locations across the globe.

The index shows that in the 12 months to June residential real estate prices in Melbourne grew 11%, making it the fifth strongest market in the world over that period.

Sydney came in just behind Melbourne in sixth position, with prices growing 10.2% in the 12-month period.

Michelle Ciesielski, Knight Frank’s Australian residential research director said the Melbourne and Sydney illustrate the strength of the Australian market.

“While there continues to be global uncertainty, Australia is considered highly desirable for long-term wealth preservation,” Ciesielski said.

“It also helps that Australia is highly ranked for lifestyle and well-placed for the education of future generations. This is despite the Foreign Investment Review Board (FIRB) application fees, as well as foreign investor duties and land tax surcharges in Sydney and Melbourne,” she said.

“Locally, Australia has seen a steady recovery in non-mining activity towards a more services sector-dominated economy.  The share market has experienced an upward trajectory over the course of 2016, whilst business confidence remains positive in this low-interest environment.”

The Canadian city of Vancouver took top spot on the list for the fifth straight quarter with growth of 36.4% in the past 12 months.

Shanghai took second spot with growth of 22.5% in the year, followed by South Africa’s Cape Town where prices rose 16.1%.

The remaining spot in the top five went to Canada’s Toronto where prices grew 12.6% over the year.

Of the 37 cities on the index, Hong Kong was the worst performer as prices fell 8.4% in the year.

Nicholas Holt, Knight Frank’s Asia Pacific research head noted that many of the top performing markets are located in jurisdictions where new foreign buyer tax arrangements have been introduced.

“The latest move by policy makers in Vancouver to apply an additional tax for foreign buyers has mirrored some of the similar moves over the last few years in Asia-Pacific. Hong Kong and Singapore, most notably, have added 15% additional buyers stamp duties, while the Australian states of Victoria, Queensland and New South Wales have also recently introduced various additional levies for foreign buyers,” Holt said.  

“Whether you are a domestic or foreign property investor, policy interventions are becoming more regular – and in some cases unpredictable – meaning that market analysis must move beyond simple demand-supply relationship and pricing into the realms of political science,” he said.