Christie’s: Global Sales of Luxury Homes Cooled in 2016

Toronto the leader in hottest luxury markets
May 10, 2017 16:49, Last Updated: May 10, 2017 20:50

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 US$100 million.

A report released on May 10 by Christie’s International Real Estate shows that sales of homes priced at US$1 million or more edged up about 1 percent worldwide last year.

That represents a sharp slowdown from 2015, when luxury home sales climbed 8 percent, and from 2014, when sales vaulted 16 percent.

However, 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; San Francisco; Austin, Texas; and, Charleston, S.C.

Toronto led a separate gauge of the hottest luxury markets

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 five-acre estate in Los Angeles where countless celebrity-laden parties have raged, was originally 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 $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.

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-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 percent in the U.K. from a year earlier, while sales slipped 4 percent in the United States and slid 29 percent in markets in the Asia-Pacific region. In contrast, sales climbed 20 percent in Europe and 44 percent 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 percent from 195 days in 2015.

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.

Sales prices rose in more than half of the markets in Christie’s report. Toronto posted the biggest gain, 20 percent. Prices were flat in 26 percent of the markets. Another 21 percent of the markets posted declines in prices.