Luxury may not be all that it used to be.
The prices of “luxury” real estate properties worldwide rose an anemic 1.1% in the third quarter of 2019 compared to the same period in 2018, according to research by Knight Frank. In fact, these were the weakest results in a decade.
By Tom Roberts
The firm’s research shows priced actually fell by 4.4% in New York, 3.9% in London and 10% in Vancouver.
“No wonder. 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,” reported Bloomberg.
“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.”
Rich buyers are not as confident as they used to be when surveying properties in such major cities as London, Hong Kong and New York, the research showed.
“The reversal has come in part as governments erected barriers to slow runaway price growth driven — at least in part — by all the billionaire investors who came before,” reported Crain’s. “The winners were cities such as Moscow, as rich Russians chose to buy at home, and Taipei, favored over Hong Kong, the world’s most expensive housing market.”
“We’ve had an unprecedented run in high-end real estate and now many of these markets are struggling with excess supply or uncertainty,” Jonathan Miller, president of appraiser Miller Samuel Inc., told Bloomberg. “‘Uncertainty’ is the most overused word in real estate right now and probably for good reason.”
The trend is getting attention on the West Coast, as well. “There’s a whole lot of price cutting going on in the multimillion-dollar home market,” reported the Los Angeles Times. “It’s typical for this time of year by sellers hoping to wrap up a deal before year’s end. Among notable price choppers we recently spotted are a singing show creator and an NBA head coach. Those who don’t sell now will likely be taking their places off the market soon so they can start the New Year as a ‘fresh’ offering. Watch for it.”
The pinch is being felt in Europe, as well. “Amid London’s residential real estate downturn, one particular group is making the most of the market fatigue: U.S. buyers,” noted Barron’s. “A double-whammy of falling residential prices—pulled down since 2014 by increases to stamp duty tax and Brexit uncertainty—combined with the slumping value of the pound, means bargains abound for those with dollars to spend.”