Why the rich are “Writing Off” New York City, London, and more

The international luxury housing market is thriving, but the traditional epicenters of high-end purchasing could be heading for trouble. According to a new survey from Christie’s International Real Estate, home sales over $1 million declined in many traditionally popular high-end markets over the past 12 months, while buyers with deep pockets appeared to be more interested in sinking their money in emerging luxury markets instead. In fact, although the money spent on luxury housing rose by eight percent worldwide last year, New York, Hong Kong, and London all saw declines. Instead, Auckland, Toronto, and Victoria (British Columbia) showed startling climbs in purchasing volume, with amount spent rising 63 percent, 48 percent, and 45 percent, respectively.

Christie’s CEO Dan Conn speculated that the shift likely has to do with something that nearly all homebuyers have in common at some level: the idea that their home will double as an investment. “Investors are looking for markets that remain affordable compared to primary markets and thus have more growth potential,” he explained, noting that skiers who traditionally might have purchased in Aspen might now purchase in Jackson Hole, Wyoming, the sixth-fastest growing market for home sales over $1 million.

This doesn’t mean, however, that Hong Kong, New York, and London are fading fast. In fact, they still top the lists for average price per square foot, with Hong Kong prices at an average of $3,000 per square foot! Furthermore, all luxury homes are moving off the market faster. In fact, in 2015 luxury homes sold, on average 23 percent faster than they did in 2014. Hong Kong and London are the only notable exceptions to this trend; the two cities average 95 more days on market in 2015 than they did the year prior.

Do you think that this shift in the luxury market has broader meaning for the international real estate market?