Luxury Real Estate Sales Flourish in City and Suburbs Across the Globe
Sales of US$1 million+ homes in primary housing markets grew by 10% in 2017
As revealed in Luxury Defined 2018—our latest annual report on the global prime property sector—record-breaking equity markets expanded the wealth of high-net-worth (HNW) and ultra-high-net-worth (UHNW) individuals in 2017, acting as a demand accelerator for luxury real estate markets the world over. Luxury home sales overall grew by 11% annually in our studied 81 international housing markets, with both primary and second-home markets across the globe recording robust year-on-year growth.
Worldwide sales of million-dollar-plus homes in primary housing markets—defined in our study as cities, urban areas and suburbs where the majority of properties are generally owner-occupied or primary residences—flourished in 2017. Luxury transaction volumes in primary markets globally were up 10% year-on-year, the strongest annual gains in this luxury housing cohort recorded in our previous four Luxury Defined reports.
It must be noted, however, that 2016 sales volumes in many markets were uncharacteristically low, thus the year-on-year comparison shows exceptional growth. The number of luxury homes sold in 2017 across some major markets—in cities such as Miami, London, and Singapore—was still much lower than annual sales volumes recorded several years ago.
London represents a prime example of this trend. Although the city’s £2 million-plus sector recorded a 4% annual increase in the number of property sales, volumes still are lagging the rapid pace set in the earlier part of the decade. “Luxury sales, particularly in prime central London, were hit with four issues in 2017: Brexit, stamp duty land tax, a rise in interest rates, and a snap general election which resulted in Prime Minister May having a weaker mandate in Parliament,” says Lulu Egerton of Strutt & Parker, noting that house prices fell alongside buyer confidence and transactions. “After a tough period of adjustment, 2018 has started with attractively priced luxury properties and motivated vendors.”
London stands in contrast to Paris, where the luxury housing market went from strength to strength, especially since the election of President Macron. “It’s as if a wind of newly found confidence has swept over the apprehension and pessimism that dominated the last few years, a trend seen among both domestic and international clientele,” says Charles-Marie Jottras of Daniel Féau Conseil Immobilier, noting that his firm closed over 50 sales for €4 million-plus in 2017, more than double the prior year.
Inventory remains an issue at the entry-level luxury price points in markets with a fast-growing population of high-wage earners and low unemployment. In Dublin, for example, Marian Finnegan of Sherry FitzGerald notes that supply constraints persist across all market sectors. “The latest estimates on stock for sale reveal that only 1.3% of our private housing is available for sale. This is especially pronounced at the higher-end of the market.”
Luxury Homes in Many Primary Housing Markets Sell Faster in 2017
Limited luxury housing stock and high demand is evidenced by the decline in the time needed to sell a prime property. With the exception of markets affected by newly introduced cooling measures (Toronto, Vancouver) and markets with an influx of new inventory (New York, Miami), many primary markets across the globe witnessed declines in the average time needed to sell a luxury home. The average days on market for luxury homes in primary housing markets was 146 days at year-end 2017, compared with 160 days the year prior.
‘Hot’ luxury real estate markets such as California’s Orange County, Paris, and Montreal all saw year-on-year declines in the average time it takes to sell a luxury property, as outlined in the interactive chart below.
[ Excerpt from Christie’s International Real Estate’s 2018 Luxury Defined white paper on the international prime property market. Read more insights from the latest report here ]
