The global luxury housing market lost some of its sheen last year as financial markets became unsettled and many wealthy buyers began to look for less expensive homes.
“The return of realism,” is how Christie’s International Real Estate chief executive officer Dan Conn described the high-end market that stretches from San Francisco to Singapore.
Sales in a sector whose average home prices start at US$2.2 million slowed last year, increasing by 8 percent, half its 2014 pace. The decline most likely reflects stability rather than weakness, according to a report released on Thursday by Christie’s.
Photo: Hilton & Hyland / Courtesy of Christie’s International Real Estate via AP
Properties in London and Hong Kong are sitting on the market longer. On average, homes are sold for prices 19 percent below the original asking price, compared with 14 percent below the asking price in 2014.
The number of luxury-home sales in the often sizzling Manhattan market dipped 5 percent last year. Falling oil prices led sales in Dubai to tumble 25 percent.
“You can’t have massive double-digit growth year after year after year,” Conn said. “In some ways, there is a limit.”
However, a luxury market that experts say is normalizing still looks otherworldly when compared with conventional real estate. For example, some homes include cigar rooms with specialized ventilation and wine collections displayed in climate-controlled glass walls instead of in cellars.
Around the world, a single square meter in a luxury home varies dramatically — from about US$2,150 in Monterrey, Mexico, to US$48,400 in Monaco. The highest price paid for a home last year was US$194 million for the Barker Road Estate in Hong Kong, which, judging by pictures, was still something of a fixer-upper.
Not all luxury markets reflected the consequences of weaker global economic growth. The cheaper euro helped to boost pied-a-terre purchases in Paris.
Yet in an emerging trend, the luxury market last year reached beyond the traditional hubs of global commerce and posh resort towns. Places with humbler reputations enjoyed sharp increases in high-end sales, a pattern likely to continue through this year, Conn said.
Christie’s reported a 40 percent jump in the sales of luxury properties in Portland, Oregon, for example. And Auckland, New Zealand, experienced a 63 percent surge in luxury home-buying.
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