The Western Canadian city came first place in the Prime Global Cities Index for the fifth consecutive quarter but this may soon change.

Vancouver recorded the strongest price inflation of luxury residential markets worldwide in the year to the end of June, according to new data from Knight Frank. 

According to the index, which tracks prime residential prices across 37 cities worldwide, prices in Vancouver surged 36 per cent over the year. However, price inflation in the city is expected to slow in light of the British Colombia Government's plans to introduce a 15 per cent tax for foreign buyers, effective from 2 August 2016.

Vancouver follows in the footsteps on cities such as Hong Kong, Singapore, Sydney, and Melbourne, where policymakers are moving to control the flow of foreign capital into their housing markets to improve affordability for local residents.

“The majority of our top ten ranking cities have been on the receiving end of new cooling measures in the last 12 months,” said Kate Everett-Allen, head of international residential research at Knight Frank.

“From interest rate hikes to fees for foreign buyers, higher land taxes, or new rules on the number of second homes that can be acquired, lowering price inflation is high up government agendas which suggest that a year from now the cities populating the top ten rankings could look very different.”

Other stand-out performers in the ranking include Shanghai, Cape Town, Toronto, Melbourne and Sydney. They all saw annual price growth reach double figures in the year to June.

Meanwhile, price growth in Rome and Madrid has beaten that in New York and London, which ranked 29th and 30th place respectively. In London, prime prices had already softened in the run-up to the EU referendum in June as the city absorbed the fifth change to stamp duty rates in as many years. Annual price growth in London's prime property market has slowed from 8.3 per cent to -0.6 per cent over the last five years. The market will now have to deal with the Bank of England’s decision to cut the base rate to 0.25 per cent, on top of ongoing Brexit uncertainties.

By world region, Australasia is on top with prime residential prices rising by 11 per cent on average followed by North America at 10 per cent.

“The global economy is still in a precarious state lacking any real engine of growth. Low oil prices, deflationary concerns in the Eurozone, uncertainty surrounding the impact of the UK’s Brexit decision and weaker-than-forecast US GDP figures represent just some of the challenges on the global economic landscape,” said Everett-Allen.