Is the global luxury market boxing out buyers? One publication says that luxury property prices in 45 cities rose just 1.1 percent in the third quarter, due largely to market uncertainty.
The prices on high-end properties experienced their weakest yearly gain since the recession, falling 4.4 percent in New York, 3.9 percent in London, and 10 percent in Vancouver, Bloomberg’s Prashant Gopal reports.
“There’s uncertainty at every corner, from trade wars to Brexit, Hong Kong pro-democracy protests and a populist backlash in some of the world’s biggest and most affluent cities that are imposing new taxes on the rich,” the publication said.
The New York Times reports, in fact, that the volume of sales and the price of co-ops and condos in Manhattan fell in 3Q, blaming that downshift to higher transfer-tax rates for luxury apartments that went into effect over the summer. London also passed levies aimed at luxury buyers.
Globally, traditionally safe havens for parking cash and buying property have faltered as governments put procedures in place designed to slow price growth driven by, well, wealthy looking to park their cash and buy property in safe havens.
“The safe havens are becoming less certain,” Dan Conn, chief executive officer of Christie’s International Real Estate, told Bloomberg. “It’s becoming much more challenging in the hubs to find a high quality place to deploy capital.”
That, combined with projects that were started when well-heeled buyers were plentiful now being delivered, has created a glut of luxury properties in several markets.
“‘Uncertainty’ is the most overused word in real estate right now and probably for good reason,” Jonathan Miller, president of appraiser Miller Samuel Inc., said.
Experts also blame politics. Some buyers may be pausing on purchases in New York while they wait out the upcoming presidential election, for instance, one expert said, and others may be holding back in London while Brexit is hashed out.
The two biggest cities in California — Los Angeles and San Francisco, stayed largely flat, with a mere 0.2 percent increase in the former.
In fact, Realtor.com’s latest analysis of the California market found that Los Angeles, California’s largest luxury market, saw its first price declines since 2016 in August, with prices dropping 0.5 percent year-over-year, and million-dollar sales declining 4.5 percent since last year.
In other words, it’s a buyers market in several luxury-laden locations now.
But that’s not true everywhere. According to Knight Frank’s study, Moscow saw a price increase of 11 percent, largely thanks to wealthy Russians opting to buy at home.
“Russia has plenty of rich people,” the Bloomberg article explained. “There are at least 189,500 ultra-high net worth individuals in the country controlling about $1.1 trillion, according to Capgemini estimates. It’s also incredibly unequal. There are 23 Russians on the Bloomberg Billionaires Index, a ranking of the world’s 500 wealthiest people, worth about a combined $271 billion.”
Prices are also up in Frankfurt by 10 percent, largely due to the fact that it is a banking capital with affordable prices, and is seen as being stable.
One spot in the U.S. that is bucking the luxury decline? Florida — where 11 counties count as luxury markets in Realtor.com’s analysis. In August, luxury prices across the state reached $1.03 million, up 2.8 percent year-over-year, and million dollar sales are up 13 percent year-over-year.
We’ll have more about that Florida market Friday, when we share our recent conversation with Realtor James Watts.