Sales of $10 Million-Plus Homes Are Dropping Because of Rising Interest Rates
Sky-high interest rates are taking a toll on the ultra-luxury housing market.
Just this week, New York’s priciest listing took a hefty 22 percent chop. The Central Park South penthouse, which landed on the market a year ago for $250 million, is now asking a still sky-high $195 million. “Even with the new price, the brokers will probably have a lot of work to do,” Jonathan Miller, president of appraiser Miller Samuel Inc., told Bloomberg.
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While global sales in the super-prime sector remain higher than their pre-pandemic levels, they’ve dropped a significant 11 percent compared to the first three months of this year, according to a new report from Knight Frank. The London-based agency also found that sales of $10 million or more were down 13 percent annually in the 12 cities that they analyzed, primarily due to rising interest rates.
“Super-prime sales globally have retreated from recent highs but are still outpacing pre-pandemic levels,” said Liam Bailey, global head of research at Knight Frank. For example, sales in the 12-month period up to June tallied up to 1,638 in 2022, while the total sales in 2019 were 1,009.
London saw a slowdown of 35 percent annually and had 21.5 percent fewer transactions compared to the first quarter. Similarly, New York had a 19 percent drop in the second quarter and saw an 8.8 percent decline on an annual basis.
On the flip side, when it comes to which cities saw the highest number of $10 million-plus residential sales, Dubai came out on top. The emirate had an impressive 79 percent uptick between Q2 2022 and Q3 2023. Elsewhere, Syndey landed in second with a 46 percent rise, followed by Paris with a 17 percent increase and Geneva which had a 7 percent spike in that same time period.
“Dubai continues to lead the pack but London and New York are still seeing healthy volumes,” added Bailey. “The biggest constraint across a majority of markets in the near term is supply—a lack of new development starts between 2020 and 2022 means a lean 2024 for new delivery, pointing to rising competition for available stock, which should act to put a floor under pricing.”
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