Luxury Home Prices Forecast to Rise Globally This Year—but Not as Much as Expected
Increases of 4.4% are in the cards, down from 6.1% growth forecast at the end of 2021, according to Knight Frank.
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Inflation, rising interest rates and other uncertainties have cooled price growth predictions for luxury homes in cities around the world, according to a Wednesday report from Knight Frank.
Prices of high-cost homes in 25 global cities are expected to rise 4.4% on average in 2022, down from 6.1% in December 2021, the data showed.
“Despite the reduction…this still represents strong growth, outpacing our prime index’s performance in nine of the last 10 years,” Kate Everett-Allen, Knight Frank’s head of international residential research, said in the report.
Nine of the cities tracked in the report are set to see stronger price appreciation than predicted at the end of 2021, with 11 now expected to see less robust growth than anticipated and five remaining unchanged, the report said.
Miami and Dubai landed in the No. 1 spot for price growth, with both cities expected to see prices rise by 12% this year, the data showed.
“However, for both prime markets this represents a slowdown compared to their stellar performances in 2021,” Ms. Everett-Allen continued
Price growth for luxury homes in Auckland has slowed the most—22%—followed by Seoul and Vancouver, which saw drops of 12% and 5%, respectively, since the end of last year.
In Auckland, tighter lending laws were introduced at the end of 2021, plus six interest rate rises starting in October, are behind the shift in buyer sentiment “from a fear of missing out to a fear of overpaying,” the report said.
Although growth is set to slow in 2023, many cities will still see prices increase.
In the U.S., Miami and Los Angeles are predicted to see the largest price acceleration, 8% and 7%, respectively. London (6%), Madrid (6%) and Seoul (5%) are also in the top five cities for price growth next year.
“Overall, we expect more muted price growth in 2023, averaging 2.8% growth across all 25 cities,” Ms. Everett-Allen noted.
Reprinted by permission of Mansion Global. Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: August 10, 2022.
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Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
Capital cities lead the way as median home values see clear upswing
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Home values continue their upwards trajectory, recording the strongest monthly growth in 18 months, CoreLogic data shows.
The property data provider reports that their Home Value Index has noted a third consecutive rise in values in May, accelerating 1.2 percent over the past month. This is on the back of a 0.6 percent increase in March and 0.5 percent rise in April.
Sydney recorded the strongest results, up 1.8 percent, the highest recorded in the city since September 2021. The fall in Sydney’s home values bottomed in January but have since accelerated sharply by 4.8 percent, adding $48,390 to the median dwelling value.
Melbourne recorded more modest gains, with home values increasing by 0.9 percent, bringing the total rise this quarter to 1.6 percent. It was the smaller capitals of Brisbane (up 1.4 percent) and Perth (up 1.3 percent) that reported stronger gains.
CoreLogic research director Tim Lawless said the lack of housing stock was an obvious influence on the growing values.
“Advertised listings trended lower through May with roughly 1,800 fewer capital city homes advertised for sale relative to the end of April. Inventory levels are -15.3 percent lower than they were at the same time last year and -24.4 percent below the previous five-year average for this time of year,” he said.
“With such a short supply of available housing stock, buyers are becoming more competitive and there’s an element of FOMO creeping into the market.
“Amid increased competition, auction clearance rates have trended higher, holding at 70 percent or above over the past three weeks. For private treaty sales, homes are selling faster and with less vendor discounting.”
Vendor discounting has been a feature in some parts of the country, particularly prestige regional areas that saw rapid price rises during the pandemic – and subsequent falls as people returned to the workplace in major centres.
The CoreLogic Home Value Index reports while prices appear to have found the floor in regional areas, the pace of recovery has been slower.
“Although regional home values are trending higher, the rate of gain hasn’t kept pace with the capitals. Over the past three months, growth in the combined capitals index was more than triple the pace of growth seen across the combined regionals at 2.8% and 0.8% respectively,” Mr Lawless said.
“Although advertised housing supply remains tight across regional Australia, demand from net overseas migration is less substantial. ABS data points to around 15% of Australia’s net overseas migration being centred in the regions each year. Additionally, a slowdown in internal migration rates across the regions has helped to ease the demand side pressures on housing.”
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
