China's economic slowdown is starting to hurt cities across the world, primarily effecting luxury homes defined as the most expensive five percent of houses in each city. 

The slowdown is largely hitting China's domestic real estate market and major cities throughout Asia. In the world's major cities, Knight Frank Prime Cities Forecast is predicting luxury prices will slow down by nearly half, from 3% to 1.7%. 

However, in an interview with CNBC, Liam Bailey, global head of research at London-based Knight Frank, said the effect of the Chinese economic slowdown could actually be counter-intuitive to the notion that China's economic slow down will cause a global economic slowdown.

"What we've actually seen is that as you get more economic uncertainty within China, the desire of the wealthy Chinese and even the middle class to diversify their investments outside of China has increased," Bailey said. 

Along with Australia, the U.S. is also likely to benefit from Chinese flight capital. New York is expected to see prices go up 5 percent in 2016, according to the report, while Miami will see gains of 2 percent. The U.S. may also benefit from high prices and new, less wealth-friendly tax regimes in London.

The question, [Bailey] said, is whether those U.S. gains will continue, given the potential for higher interest rates and a stronger dollar, which makes real estate more expensive for overseas buyers.

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