Luxury Home Prices Forecast to Rise Globally This Year—but Not as Much as Expected
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.
