Number of luxury real estate sellers rises globally
Luxury Portfolio International report shows sustainability is a ‘critically important’ consideration among affluent buyers
The 2022 State of Luxury Real Estate Report by Luxury Portfolio International (LPI), the world’s premier network of luxury residential real estate brokerages, has revealed a continuation of dominating home purchasingrelated trends that began in third quarter 2020 and continued throughout 2021.
The study shows that demand for luxury real estate remains high; price increases are expected to continue; supply remains lower than demand; time-on-the-market for luxury single-family homes often continues to “last just hours”; and sustainability is “critically important” (66%) when considering future home purchases.
It also shows an increase in the number of affluent sellers of residential real estate worldwide; that among luxury homes buyers, the majority (74%) shared strong feelings of a personal economic confidence and still 75% are significantly concerned that their discretionary spending power could be tested soon.
And while 2022 is expected to continue at a fast pace, there are signs that the luxury residential real estate market will be increasingly stabilising, a crucial step to avoid complications for a long-term, superheated market.
With 75% of luxury home buyers choosing their next home with environmental sustainability headlining a broad range of findings from a study of the world’s affluent households by LPI, 2021 ends as one of the most robust luxury residential real estate markets in history.
“After a record-breaking year in luxury real estate, we anticipate that some balance will be restored to the market,” said LPI president Mickey Alam Khan.
“It is important to view the luxury market over a trajectory of several years, noting that half of 2020 was in paralysis due to the pandemic. The red-hot market that began in the latter part of 2020 continued into 2021 and will continue a positive trajectory into 2022. The difference will be that there will be more luxury sellers in 2022 than in 2021, and while there will be fewer actual luxury buyers, it is still a seller’s market. The pandemic madness that drove us to an overheated market is being normalised. Demand will remain strong, and a healthy, new normal in luxury real estate will start to take hold in 2022.”
The study comprises data from individuals in the top 1% to 5% income bracket across 20 countries, and touches on a broad range of topics crucial 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 to have features and amenities that better prepare them for the future. Some 75% of those surveyed noted choosing their next home with sustainability in mind, with an unprecedented 90% noting “yes” as to factoring sustainability in relation to a “Next Chapter in Life” home search. According to the study, the “next chapter” search pertains to those moving to be closer to family, because of their children’s education, a career move, and other mitigating factors.
People interested in sustainability as a major factor of their home purchase are 71% more likely to view the purchase as a legacy home that will be passed on to their heirs. Further, as interest in sustainability grows, the quality of the buyer improves for the benefit of the seller, in that this buyer wants to transact sooner 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 aroused by posts seen on social media. With a year at home and headlines touting the hot market, Fomo has become a significant concern for 26% of luxury buyers. Fomo manifests in different ways, first as a true “missed the boat” moment where prices extend beyond reach. A second concern – equally impactful – is arranging finances for major purchases.
While Covid-19 remains a significant concern, the study reveals that the market has already accounted for much of its effects. This compares to last year when the top trend in luxury real estate was finding a home that would accommodate the family that works from home.