The
characteristics of luxury real estate differ from country to country. However,
location, lifestyle, and provenance (history of ownership) often play
significant roles in determining how high-net-worth individuals value
properties.
Today,
there are more billionaires in the world than before the 2007-2008 financial
crisis. There are also more millionaires - 55 percent more since the year 2000.
With more high-end homebuyers entering the market, the supply of luxury
properties can’t keep up with demand. The result? Multiple offers and bidding
wars, which are driving sales prices up.
Unlike
the general housing market, the luxury market tends to remain insulated from
global political shifts and money flows, as such concerns are less likely to
impact the purchase decisions of millionaires and billionaires around the
globe. So while some economists predict that U.S. home prices will only rise by
one or two percent per year over the next half decade, the same may not be true
for luxury home prices.
According
to a recent study, the luxury real estate market will likely follow the luxury
goods market - not the general housing market. And with luxury goods expected
to grow about 7 percent year over year through 2014, experts anticipate that
luxury real estate will continue to show strong momentum.
Early
numbers confirm what the experts predicted. According to the National
Association of Realtors, there’s been a 38.7 percent increase in sales of
properties worth between $750,000 and $1 million over the past year, and sales
of properties worth $1 million-plus have risen by 25.7 percent during the same
time period.
