Luxury agent Sotheby's says increasing global wealth creation is helping maintain interest in the market for high-end real estate
With rising inflation and interest rates across much of the world, how will the market for high-end real estate be impacted?
According to one of the world’s leading luxury real estate agents, interest is expected to endure despite the economic challenges facing would-be buyers.
Sotheby’s International Realty has published its Luxury Outlook report for 2023 which reveals that many agents are seeing continued interest in high-end homes, following a two-year frenzy in the market.
The firm says that the projected rise in global wealth creation, as detailed in the Credit Suisse Global Wealth Report 2022, could lead to an influx of luxury real estate buyers in the coming years. Price points could also rise.
"Buyers and sellers are once again manoeuvring an ever-changing and fast-moving real estate market," said Bradley Nelson, chief marketing officer, Sotheby's International Realty. "Our goal for the third edition of the Luxury Outlook report was to couple the expert insight of our agents with the perspectives of leading institutions on the trends affluent buyers can expect in the months ahead to help them make opportunistic transactions in 2023."
The report draws on the expertise of Sotheby’s own agents who transact in the US$10 million+ real estate market, along with input from Morgan Stanley, the Fed, Credit Suisse, Wells Fargo Wealth & Investment Management, and the National Association of Realtors.
Key findings
Among the key findings of the report:
- Sellers are choosing not to sell and take on new mortgages, which could end up being two to three percentage points higher than the ones they have now, protecting home prices from falling
- More than 60% of leading Sotheby's International Realty agents said inventory is low or very low in their regions
- Now that interest rates have more than doubled over the past year, buyers are turning back to cash
- The US dollar reached a decades-long high, resulting in US buyers flexing their buying power abroad
- Real estate sales across major metaverse platforms totalled US$501 million in 2021, according to MetaMetric Solutions
- The most important amenities for today's luxury buyers are a salt-water swimming pool, water purification systems, electric car charging stations, and floor-to-ceiling windows
