Despite both cities being in the middle of a housing affordability crisis, luxury house/apartment prices have plunged down the list of the world's most expensive luxury residential property markets.

Shanghai saw the biggest increase in the value of luxury homes over the past 12 months, with prices jumping over 27 per cent. The likes of Beijing (26.8 per cent), Auckland (16 per cent) and Toronto (15.1 per cent) also saw steep rises.

Sydney (9.3 per cent) and Melbourne (8.8 per cent) were 11th and 12th on the list, meaning buying a house in Double Bay or Toorak will likely be on the agenda for people with deep pockets.

This is the result in the Knight Frank Wealth Report for 2017, which reveals the ultra-high-net-worth people of the world have found Australia and they are coming here in droves.

These people are targeting residential, homes and apartments in the already-hot Sydney and Melbourne markets. The attraction of stable countries, politically and economically, has triggered this migration.

Reflecting the growing gap in housing affordability is the Knight Frank Prime International Residential Index (PIRI), which reveals a huge gap of 49 percentage points between strongest and weakest-performing luxury market, up from 45 in 2015.

Australasia was the strongest-performing world region in 2016 with prices rising by 11.4 per cent year-on-year.

Since the global financial crisis, the world's wealthiest people have shifted their focus from the size of their returns to the safety of their capital, the report says.

Of the people worth more than $US30 million ($39 million) or more in net assets, termed ultra-high-net-worth individuals (UHNWI), more than 70 per cent are tipped to invest in Sydney and Melbourne over the next 10 years, according to the report.

Currently, most of these people are from Asia, but the growth in ultra-wealthy populations in Africa and Latin America will outpace that of Europe and North America over the next decade.

Hotspots for growth include Mauritius, Ethiopia, Tanzania, Uganda, Kenya, Rwanda, Mexico and Argentina.

According to the report, Australasia, Canada, Malta, the United Arab Emirates, Qatar, Monaco and Israel are examples of key areas attracting migrating UHNWIs, due to being seen as offering a fiscal and political "safe haven", as well as quality of life.

The less ultra, but still very high-net-worth individuals, (HNWI) people, with a net worth of over $US1 million, excluding their primary residence, are also calling Australia home.

According to Michelle Ciesielski???, Knight Frank's director, residential research, Australia, the latest figures reveal that Sydney has seen an annual net inflow of 4000 HNWIs, while Melbourne and Perth have seen a net inflow of 3000 and 1000 HNWIs respectively.

"Sydney is at the top of the list for the highest net inflows of HNWIs globally, with the inflow representing growth of 4 per cent of the HNWI population already based in the city," Ms Ciesielski said.

"Melbourne comes in at second on the list globally with an annual net inflow of 3000 HNWIs, of about 4 per cent of the existing Melbourne HNWI population. Perth sits at eighth on the list with a net inflow of 1000 HNWIs.

Ms Ciesielski added that there is an extra layer of buyers, the expat dollar, which is still favourable, and as a result many are securing their ideal home for when they return to Australia.

"Foreign interest in Australian prime residential property has remained relatively strong throughout 2016, with many currencies holding an ongoing purchasing power against the Australian dollar," Ms Ciesielski said.

While most are expected to target residential assets, the ongoing strength of commercial properties could also attract cash.

According to BIS Shrapnel chief economist Frank Gelber, "Sydney's blistering commercial market still has a 45 per cent price boom left in its current cycle".

Speaking at the Australian Property Institute's Sydney Property Market Outlook on Thursday, Dr Gelber hinted that the figure might only be a tempered forecast.

He said a lot of incentives in the market had started to evaporate, with face rents rising and investors aggressively pushing down yields, leading to dramatic price rises.