Rich love buying in Canada, now a global luxury home sales leader
LOS ANGELES — 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 (all figures US).
A report released Wednesday by Christie’s International Real Estate shows that sales of homes priced at $1 million or more edged up about one per cent worldwide last year.
That represents a sharp slowdown from 2015, when luxury home sales climbed eight per cent, and from 2014, when sales jumped 16 per cent.
Canada was an exception. Fuelled by sizzling markets in Toronto and Victoria, B.C., luxury home sales there climbed 44 per cent.
Despite the sluggish sales growth internationally, Christie’s says luxury home prices continued to rise last year, increasing about two per cent from a year earlier. And for the first time, 10 homes sold for more than $100 million each. The priciest sale, a mansion located in The Peak neighbourhood 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, which is located on a fiveacre estate in Los Angeles where countless celebrity-laden parties have raged, was bought in 1971 by Hugh Hefner for $1.05 million.
“The surprise in 2016 is the number of $100 million-plus homes sold,” said Dan Conn, Christie’s chief executive. “You saw the $100million 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 another 19 posted solid gains. Sales were essentially flat in the rest.
Even as the global economy strengthened and stock markets climbed to new highs, sales were likely held back as wealthy buyers and sellers opted to take wait-andsee 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 per cent in the U.K. from a year earlier, while sales slipped four per cent in the U.S. and slid 29 per cent in markets in the Asia-Pacific region. In contrast, sales climbed 20 per cent in Europe and 44 per cent 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 per cent 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 like Miami.
Too much inventory and sluggish sales wasn’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 of the markets in Christie’s report. Toronto posted the biggest gain, 20 per cent. Prices were flat in 26 per cent of the markets. Another 21 per cent 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, B.C.; 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.
Fewer buyers used cash to buy luxury homes last year, reversing a trend in recent years, Christie’s said.
Some 36 per cent of luxury properties were bought with cash last year, down from 44 per cent in 2015. Low interest rates, rising prices have made traditional financing more attractive for buyers.