Luxury home sales cooled in 2016, but a record number topped $100 million
Global luxury home sales cooled off in 2016 for the second consecutive year, even with a record number of homes selling for more than $100 million.
A report released Wednesday by Christie’s International Real Estate shows that sales of homes priced at $1 million or more edged up about 1% worldwide last year.
For the record:12:05 p.m. May 10, 2017
An earlier version of this story said 11 homes sold for more than $100 million each. In fact, it was 10 homes.
That represents a sharp slowdown in growth compared with 2015, when luxury home sales climbed 8%, and with 2014, when sales vaulted 16%.
Despite the sluggish sales growth, Christie’s says luxury home prices continued to rise last year, increasing about 2% from a year earlier. And for the first time, 10 homes sold for more than $100 million each. The priciest sale, a mansion in the Peak neighborhood in Hong Kong, fetched more than $270 million.
The Playboy Mansion was also among the priciest homes to sell last year, bringing in $105 million. The home, located on a 5-acre estate in Los Angeles’ Holmby Hills neighborhood where countless celebrity-laden parties have raged, was originally bought in 1971 by Hugh Hefner for $1.05 million.
Read more: It’s official: Playboy’s Hugh Hefner has a new landlord »
“The surprise in 2016 is the number of $100-million-plus homes sold,” said Dan Conn, Christie’s chief executive. “You saw the $100-million mark be crossed for the first time in China, which you would not have predicted, certainly before 1978.”
The luxury brokerage based its report on an analysis of sales data and other factors for homes that sold for $1 million or more in 101 markets worldwide. Private luxury home sales were not included in the analysis.
Twenty-four of the markets in the report posted a sharp drop in sales last year, while 19 others posted solid gains. Sales were essentially flat in the rest.
Even as the global economy strengthened and stock markets climbed to new highs, sales probably were held back as wealthy buyers and sellers opted to take a wait-and-see approach to the geopolitical uncertainty that shaped much of 2016, including Britain’s vote to leave the European Union, new restrictions on Chinese capital outflows, the U.S. presidential election and Russian sanctions.
“If you look at some of the markets where there was uncertainty, it had an impact,” Conn said. “People could afford to wait in the U.K. because there was uncertainty and prices have softened over the last couple of years.”
Luxury home sales sank 67% in Britain from a year earlier, while sales slipped 4% in the U.S. and slid 29% in markets in the Asia-Pacific region. In contrast, sales climbed 20% in Europe and 44% in Canada.
Another sign that luxury home sales cooled last year: Homes took longer to sell than in 2015. Luxury homes spent an average of 220 days on the market before they sold, Christie’s said. That’s up 13% from 195 days in 2015.
Growth in new luxury condos and other high-end properties took out some of the urgency among buyers in markets such as Miami.
Excessive inventory and sluggish sales weren’t a problem in Hong Kong, which topped Christie’s index of top luxury property markets with sales that included four homes that sold for more than $100 million each. The city now has the most homes for sale at $20 million or higher.
London, which had always held the top spot, slipped to second, followed by New York, Los Angeles and Singapore.
Sales prices rose in more than half the markets in Christie’s report. Toronto posted the biggest gain, 20%. Prices were flat in 26% of the markets. And 21% of the markets posted declines in prices.
Toronto led a separate gauge of the hottest luxury markets, or those where the pace of sales was strongest, reflecting heightened demand. Its luxury home sales were nearly double what they were in 2015.
Low inventory and price increases spurred urgency among buyers. Luxury homes in Toronto took an average of 17 days to sell last year, down from 28 days the year before. That was the fastest sales pace of any market.
Rounding out the top five hottest luxury markets are Victoria, British Columbia; San Francisco; Austin, Texas; and, Charleston, S.C.
Going by the price per square foot, Monaco was the most expensive market in 2016, with luxury homes there fetching an average of $5,420 per square foot, Christie’s said. That was followed by Hong Kong, London, Cote d’Azur and New York, with a price per square foot of $2,000. In Los Angeles, it was $1,068.
Fewer buyers used cash to buy luxury homes last year, reversing a trend in recent years, Christie’s said.
Some 36% of luxury properties were bought with cash last year, down from 44% in 2015. Low interest rates and rising prices have made traditional financing more attractive for buyers.
For now, it appears that 2016’s slowdown in luxury home sales is not carrying over into this year.
Two homes in Hong Kong’s the Peak neighborhood have already sold this year, one for $360 million and the other for $139 million. And in Manhattan, the number of contracts signed for properties above $5 million was up sharply in the first two months of the year.