Rich homebuyers laid low in 2019 as economic uncertainties turned global cities into risky propositions.
But don’t be surprised next year to spot the world’s wealthiest people beginning to spend money again as home prices in relatively stable economic areas continue to sink into bargain territory.
In a few cities, prices are even set to rise, according to global property consultancy Knight Frank.
Paris leads the agency’s 2020 forecast, with a 7% luxury price increase, followed by Miami and Berlin, where luxury units are also relatively affordable and in short supply.
Political and economic question marks still abound, from trade wars to next November’s U.S. presidential election. And taxes on the rich instituted by cities such as Vancouver, London, and New York will continue to weigh on sales, says Kate Everett-Allen, a Knight Frank partner in London.
“Most markets will still see prime prices increase but by smaller margins than previously,” she says.
New York’s Still a Buyer’s Market
New York City prices will fall 3% next year, a continuation of this year’s trend. (In the third quarter of 2019, prices were down 4.4% from the same period the previous year, according to Knight Frank.) To sell all the newly built condos in Manhattan at the current sales pace, it would take nine years. And the uncertainty of the presidential election will likely keep buyers on the sidelines, according to Jonathan Miller, president of appraiser Miller Samuel Inc.
Demand has also slipped because real estate investors have fled the market, spooked by a legislative environment that’s targeted them via more onerous rent regulations and an increased mansion tax, which leaves buyers of luxury property with higher closing costs.
“The luxury market on the sales side is the weakest segment of the housing market,” Miller says.