The number of luxury real estate sellers is increasing around the world

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PETALING JAYA: The State of Luxury Real Estate 2022 report from Luxury Portfolio International (LPI), the world’s leading network of luxury residential real estate brokers, revealed the continuation of dominant home buying trends that began in the third quarter of 2020 and continued throughout 2021.

The study shows that the demand for luxury real estate remains high; price increases are expected to continue; supply remains below demand; time in the market for luxury single-family homes often continues to “last only a few hours”; and sustainability is “extremely important” (66%) when considering future home purchases.

The study also shows an increase in the number of affluent sellers of residential real estate around the world; that among luxury home buyers, the majority (74%) share a strong sense of personal economic confidence and another 75% strongly fear that their discretionary purchasing power will soon be put to the test.

And while 2022 is expected to continue at a rapid pace, there are signs that the luxury residential real estate market will increasingly stabilize, a crucial step in avoiding the complications of a long-term overheated market.

With 75% of luxury home buyers choosing their next home with environmental sustainability headlining a wide range of findings from a study of the world’s affluent households by LPI, 2021 ends as one of the markets most robust luxury residential real estate in history.

“After a record year in luxury real estate, we expect a certain balance will be restored in the market,” said LPI President Mickey Alam Khan.

“It is important to visualize the luxury market on a trajectory of several years, knowing that half of 2020 was paralyzed because of the pandemic. The hot market that started at the end of 2020 has continued into 2021 and will continue on a positive trajectory in 2022. The difference will be that there will be more luxury sellers in 2022 than in 2021, and while there will be less real luxury buyers, it is still a seller’s market. The pandemic madness that drove us into an overheated market is normalizing. Demand will remain strong and a healthy new normal in luxury real estate will begin to take hold in 2022. “

The study includes data from people in the top 1% to 5% income bracket across 20 countries, and addresses a wide range of topics critical to the global luxury residential real estate market.

Sustainability, according to the study, is now a major differentiator in luxury homes, and buyers are willing to pay a premium for features and amenities that better prepare them for the future. 75% of respondents said they chose their next home with sustainability in mind, and an unprecedented 90% said “yes” to considering sustainability in a Next home search Chapter in Life. Home search “next chapter in life”, study finds for people who move to be closer to their families, due to their children’s education, career change and other mitigating factors .

People interested in sustainability as a major factor in their home purchase are 71% more likely to view the purchase as an inherited home that will be passed on to their heirs. Additionally, as the interest in sustainability increases, the quality of the buyer improves to the benefit of the seller, as that buyer wants to transact earlier and for a relatively higher budget.

Fear of missing out (fomo) is the feeling of anxiety that an exciting or interesting event may currently be happening elsewhere, often prompted by posts seen on social media. With a year at home and headlines touting the hot market, fomo has become a big concern for 26% of luxury shoppers. Fomo manifests itself in different ways, first as a real ‘miss the boat’ moment where prices stretch out of reach. A second concern – just as powerful – is to organize finances for large purchases.

While Covid-19 remains a significant concern, the study found that the market has already accounted for a large part of its effects. This is compared to last year when the main trend in luxury real estate was to find a home that could accommodate the family who work from home.

That said, according to the study, working from home weighs on a substantial percentage of luxury home buyers. The study found that 27% of luxury shoppers cited working from home as a “significant concern”. Remote working and the frustration and stress associated with being at home continue to play a significant role in the purchasing decision process.

Shoppers keen to de-stress their work-from-home environment have noted diversions such as home entertainment, nearby nightlife, and relaxation-friendly amenities like a spa / hot tub, specialty cocktail scale, and specialized rooms for media and games.

Additional key research findings include:

Globally, the upper class remains very interested in purchasing residential real estate at any price, with a 33% increase year over year. There is no doubt that 2021 will end with a backlog of buyers, making 2022 another strong year for luxury real estate.

More than 14 million wealthy households remain interested in buying a home, including 6.4 million in the luxury category. 1.2 million more luxury owners have found an interest in selling over the next three years, up 32% from last year. Record valuations undoubtedly play a key role in this decision.

Together, these factors point to a stabilization of global prices and a normalization of the market for 2022 and beyond. What once seemed like a large divide between the number of potential buyers and sellers (10.3 billion buyers and 4.0 billion sellers) is appropriately moving towards equilibrium (6.4 billion euros). buyers and 5.2 MM from sellers).

The global residential real estate demand trend will continue to grow in 2022. The percentage of individuals in the market to purchase residential real estate by the end of 2022 has increased from 30% in 2021 to 37% in 2022 in Asia. /Peaceful.

Luxury home owners are turning to selling. With new construction experiencing delays due to challenges related to goods and services, there is a constant interest in existing homes. However, owners weren’t necessarily in the market to sell last year, and as a result, lack of inventory was a big price factor in most luxury markets. Now it looks like luxury owners are convinced the iron is hot and their interest in selling has more than doubled (to 28% from 11%). In fact, 71% of homeowners believe their home’s value will increase this year, creating a strong incentive to sell. The average luxury home owner expects a 4-5% increase from 3-4% last year.

Psychologically, it’s still a sellers’ market. In practice, we can expect a more balanced relationship between buyers and sellers in the years to come. While affluent consumers participate in the residential market, luxury residence seekers are down 58% in 2021 (from 34% to 20% of total affluent), while conversely, in this delicate balance, the number of luxury sellers is increasing. by 26% (up to 16% of 13% of the total rich).

While the flight to the suburbs has been a Covid headline, research reveals that downtown luxury residential real estate is alive and well. Over half of the world’s luxury shoppers (55%) expect to buy their next home in a city, and 77% will be within commuting distance. Notably, luxury shoppers in Asia Pacific are much more likely to shop in the downtown area than their global counterparts.

The popularity of single family homes is increasing beyond North America. The study found that the popularity of single-family homes is increasing globally, with 29% of Asia-Pacific buyers seeking the luxury of additional space and privacy. Year after year, the demand for this type of housing increases as, collectively, shared living spaces become less attractive to the luxury buyer.

A new category of entry-level luxury buyers is entering the market. Across the spectrum of affluent consumers, there is greater interest in purchasing real estate under US $ 1 million. This signals a resurgence of upper-middle-class buyers who have delayed their purchases due to the pandemic, or who are now willing and able to acquire. Consequently, this creates an increase in the number of entry-level luxury buyers, up to 44% compared to 39% in the range of US $ 1 million to $ 1.9 million. This effect of democratic luxury for the greatest number is most pronounced in North America and less in Asia-Pacific and Europe / Middle East, where the upper class tends to favor relatively small groups of people with concentrations of people. very high wealth.


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