More than two years removed from the initial shock of the pandemic—and the extreme economic pendulum swings that ensued—we find ourselves at what feels like an important inflection point in the luxury real estate market. After a record-setting performance in 2021 and a strong—in many cases record-setting—first half of 2022, sales activity is gradually returning to what many would consider normal levels, similar to what we saw back in 2019.
This 2022 Christie’s International Real Estate Mid-Year Luxury Trends Report examines several of the most significant developments in the global luxury real estate market coming out of the pandemic and into a period of increasing economic volatility. Building on insights from the Christie’s International Real Estate Owners Conference in April, the Mid-Year Trends Report includes additional input from our global network of affiliates and agents, as well as specialists from Christie’s art and luxury business.
Three notable trends we identified last spring were gaining momentum at mid-year and are shaping the luxury market narrative even more heading into the fall 2022 selling season.
Amid high inflation, rising interest rates and increased volatility in equity markets, affluent consumers are increasingly making investments in hard assets, notably luxury real estate. The possibility or likelihood—depending on which one of us you ask—of a recession in 2022 is top of mind for many high-net-worth individuals, and residential real estate is often a relatively strong performer in such an environment. Sales in the first half of the year provided further evidence that these assets can be a valuable hedge against inflation.
Even the most secure consumers tend to give pause to big-ticket purchases like luxury homes during uncertain economic times. However, the amount of wealth that was created during the past decade, along with the pandemic-driven mindset of “enjoy it now,” makes an across-the-board pullback in the luxury real estate market unlikely. Rather, watch for wealthy buyers to put a premium on blue-chip markets with high barriers to entry and predictable, long-term growth opportunities.
Demand for Relative Value
Of course, blue-chip properties are priced accordingly, and those prices have gotten much higher in the past two years. As our affiliate at Christie’s International Real Estate Aspen Snowmass reports, 26 of the 40 homes that traded above the $20 million mark in that town between 2000 and 2021 sold last year. Some people simply don’t want to play in that sandbox, and many others can’t. So, as prices continued to break records through the first half of 2022, the global search for relative value in luxury property markets has emerged as another key theme—one that holds no shortage of opportunity and promise.
Mirroring Trends in Art & Luxury Goods
As we assembled this report, it was reassuring to see that many of the luxury trends we identified at Christie’s International Real Estate were also playing out in similar ways at Christie’s, the world-renowned art and luxury business with which we are closely aligned. Our colleagues at the auction house also enjoyed many record-breaking sales during the first half of the year and likewise have seen a strong appetite among luxury consumers for hard assets and blue-chip lots. You can read more about Christie’s impressive first-half results and exciting fall sales.
Back in the real estate world, we continue to think about myriad questions regarding the second half of 2022 and spring market ’23. Will we see a shift to a buyer’s market? Will the post-pandemic return of international buyers support sellers through a new phase of growth? Will the work-from-home trend moderate if labor markets begin to cool, and how will that impact homebuying?
We encourage you to read on and discuss your specific luxury real estate needs with your Christie’s International Real Estate agent. While we believe it is critical to share global market insights, no insights are more useful than those of a trusted advisor with knowledge of your local market and personal needs.
Thad Wong and Mike Golden
Co-CEOs, Christie’s International Real Estate