Rich love buy­ing in Canada, now a global lux­ury home sales leader

The Hamilton Spectator - - BUSINESS - ALEX VEIGA

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.

HIL­TON & HYLAND COUR­TESY OF CHRISTIE’S IN­TER­NA­TIONAL, THE AS­SO­CI­ATED PRESS

The Play­boy Man­sion in Los An­ge­les was among the prici­est homes to sell in 2016. It sold for US$105 mil­lion.

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