An eye on the MARKET
The luxury property landscape is anticipated to remain strong amid global turbulence throughout 2025
The enduring view of real estate as a stable investment is anticipated to contribute to its continued appeal in 2025, with opportunities in global luxury property markets persisting despite ongoing concerns about tariff impacts and inflation. Data released by the Bureau of Labor Statistics beat economists' expectations according to a June 2025 report in The New York Times, although anticipation is growing that consumer price increases could peak in the fourth quarter of 2025 if tariffs remain in place.
“The luxury real estate market saw a strong finish in 2024, meeting and even surpassing expectations in several areas,” says Philip A. White Jr., president and CEO, Sotheby’s International Realty. “The Sotheby’s International Realty brand’s U.S. sales volume growth outpaced the broader market in 2024, achieving 9.4%, compared to the industry’s 5.2% overall market growth reported by the National Association of REALTORS® (NAR).”
Luxury property purchases in 2024 and early in 2025 outperformed the rest of the market because of the continued appeal of owning hard assets and the ability of upper bracket buyers to pay cash rather than borrow at higher interest rates, White says. Globally, the Sotheby’s International Realty brand achieved US$157 billion in 2024 sales volume, marking one of its best years ever, and its global referral network generated US$4.6 billion.
“These numbers demonstrate the appeal of luxury real estate as an investment—something our discerning clients understand well as they continue to seek exceptional properties that offer both lifestyle benefits and reliable portfolio diversification across multiple countries and markets,” White says. “Our performance reflects the strength of the brand’s unparalleled global network, the expertise of our affiliated agents and our iconic brand positioning, all of which provide clients with greater access to properties, prospects and market insights—key differentiators that have enabled us to not just respond to the luxury real estate landscape but actively help shape it.”
Sales of properties at US$10 million and above soared between February 1 and May 1, 2025, compared to that same period in 2024, according to analysis published in May 2025 by The Wall Street Journal. Sales were up 50% in Palm Beach, Florida; 48% in Miami, Florida; 44% in Aspen, Colorado; 33% in Beverly Hills, California; 29% in Los Angeles, California; and 21% in Manhattan, New York, according to the report.
The strength of sales in the 2024 luxury real estate market continued in some markets in 2025, White says, with properties that were priced correctly selling quickly. The assurances felt around the luxury real estate market stems from two main themes. First, a volatile global election year is over, removing some elements of uncertainty for wealthy individuals. Second, while inventory is growing in some areas, an inventory shortage of luxury homes is anticipated to continue to push prices higher, increasing the value of property portfolios.
In the U.S., the top half of the wealthiest households saw the biggest gains in real estate value among all homeowners in 2024, according to an April 2025 report by Realtor.com®. Sales of US$1-million-plus properties made up 7.6% of all existing home sales in the U.S. in February 2025, compared to 5% in 2023. But among the 10% wealthiest households, real estate represented 18.7% of their total assets in late 2024, down from 19.9% two years earlier, despite gains in value. In late 2024, 36.3% of the assets among this group of households comprised corporate equities and mutual fund shares, the highest share ever recorded. However, recent stock market volatility is likely to have dropped that share back to one-third, similar to the end of 2023.
This five-bedroom house in Sonoma, California, offers light-filled indoor-outdoor living and vineyard views.
Sotheby’s International Realty - Wine Country Brokerage
The US$1-million-plus market, in numbers
Source: Realtor.com®
of the wealthiest households in the U.S. saw the biggest gains in 2024
of total assets for the top 10% wealthiest households in 2024 were in real estate
of all existing home sales in the U.S. in February 2025 were US$1-million-plus properties
The Realtor.com® report also found that in early 2025, there were fewer properties priced over US$1 million being listed for sale but demand for expensive homes remained high, with those homes selling faster than median-priced ones. Price cuts in the first few months of 2025 were more common for lower-priced homes, rising to 22.6%, while high-end properties stayed more stable, with only a slight increase from 13% to 13.6%.
The report also noted that volatility in the stock market and geopolitics could drive luxury home sales higher: “While 2025 started off strong, with bullish predictions and record highs, markets grappled with on-then-off-again tariffs and uncertainty over the impact of the current policy decisions. Moves like deregulation and potential tax cuts could help the economy and markets, but the unpredictability is pushing some wealthy investors toward real estate, which feels safer than stocks,” according to the report.
U.S. consumer trends
10% of America’s wealthiest earners = 50% of total consumer spending = nearly 1/3 of GDP
Source: The Wall Street Journal/Moody’s
Some of those potential investors may face competition when seeking new properties. While one factor contributing to the lack of supply in the overall housing market is that not enough new homes have been built in the past decade, another is interest rates, according to research published in February 2025 by J.P. Morgan. Since mortgage rates began to rise in March 2022, homeowners with a mortgage rate under 4% are continuing to stay put for longer to avoid the need to borrow at a higher rate for their next home, so housing stock at all levels is not becoming available to other buyers.
Interest rates remaining at higher levels for longer periods have also contributed to anticipated further price increases globally at all price points, according to research published by the investment bank UBS in September 2024. “Unintentionally, central banks have laid the foundations for the next price boom,” noted the UBS 2024 Global Real Estate Bubble Index report. “Since the sharp rise in interest rates thwarted the plans of many real estate developers, new construction has [declined] in many cities and looks set to exacerbate the housing shortage, thereby leading to upward price pressure in the future.”
Multiple factors influence the performance of luxury real estate markets. One of the most important is the confidence of high-net-worth individuals (HNWIs). Significant U.S. stock market gains—with the S&P 500 up 23% in 2024—boosted the willingness of affluent people to spend some of those profits on real assets such as property. The continued financial well-being of HNWIs extends beyond real estate: in 2024, the top 10% of U.S. households—those with an income of US$250,000 or more—accounted for approximately 50% of all consumer spending, according to a February 2025 article in The Wall Street Journal citing data from U.S. financial services company Moody’s. The stock market fluctuated as the U.S. imposed and paused global tariffs, and concerns continued around inflation and a potentially softer economy. The S&P 500 dropped 12.71% in mid-April 2025 from its record high in February 2025, although it had recovered by mid-May 2025, erasing those losses and coming within 4.2% of its high point, according to a report by AP News in May.
Resilience in the luxury property market
The gap in performance between the regular and luxury housing markets is anticipated to continue in 2025, amid headwinds caused by changing political and economic dynamics. “Everything in the economy is uncertain at the moment, but in the high-income world, that translates to opportunities,” says Selma Hepp, chief economist, Cotality, a property data analytics firm. “Many of the policy changes promised by the new administration in the U.S.—such as tax cuts—are advantageous to HNWIs. In addition, wealthier households have more resources and are less concerned about inflation and unemployment. No one is immune to uncertainty, but it’s less of a concern for HNWIs because they have investments.”
This buffer means that activity in the luxury real estate market is anticipated to continue at its current pace, with new luxury listings coming to market at notable price points. For example, in March 2025, the former home of singer Bing Crosby in Lower North Hillsborough, California, was listed by Golden Gate Sotheby’s International Realty and was quickly sold by June 2025 for US$25 million, marking the highest sale in the region in more than two years. Also in March 2025, Sylt Sotheby’s International Realty listed a castle set among 185 acres on Germany’s Baltic coast for US$201 million.
Since Nikki Field, global real estate advisor, Sotheby’s International Realty - East Side Manhattan Brokerage, and her team took over sales at 111 West 57th St. in mid-2024, they have accelerated momentum at the iconic tower. The team listed the tallest “Quadplex” penthouse in the U.S.—soaring over Billionaire’s Row at more than 1,000 feet in the air, with a lofty price to match: US$110 million—and had done over US$285 million in sales (covering both closings and contracts signed). As of May 2025, the team had signed 10 contracts and announced that the building is 81% sold, including a recent closing of Penthouse 72 for US$46.9 million.
“High-net-worth buyers remain actively engaged, particularly in the ultra-luxury real estate segment, where unique properties continue to command premium prices,” White says.
“ EVERYTHING IN THE ECONOMY IS UNCERTAIN AT THE MOMENT, BUT IN THE HIGH-INCOME WORLD, THAT TRANSLATES TO OPPORTUNITIES
”
Selma Hepp, chief economist, Cotality
The grand 111 West 57th Street Quadplex 80, in New York City, has two private terraces and 360-degree views of Manhattan and Central Park.
Sotheby’s International Realty - East Side Manhattan Brokerage
The top concerns for homebuyers in 2025
Source: 2025 Mid-Year Sotheby’s International Realty agent survey
Economic stability
Interest rates
Political climate
Environment
Tax reform
The Sotheby’s International Realty brand’s experience shows that well-positioned luxury properties continue to attract buyers, especially those offering distinctive amenities, privacy and lifestyle benefits that align with evolving luxury preferences, he adds. “While geopolitics may introduce uncertainty, growing inventory and pent-up buyer demand signal positive market conditions. Our experience tells us that investment portfolio performance plays into the financial decisions of luxury property buyers,” White adds. “However, if a deal pops up that fits their needs, they will likely act on it, regardless of other factors. For example, in March 2025, Dubai Sotheby’s International Realty achieved a record sale for a villa on Dubai’s upmarket Jumeirah Bay Island of US$90 million, breaking its own record—a US$65.5 million sale in 2024.”
Italy’s most expensive residential real estate sale in history—a 28-bedroom seafront villa in Sardinia with two private beaches, three pools and two piers—sold for US$172.8 million in March 2025, with both the buyer and the seller represented by Italy Sotheby’s International Realty.
“HNWIs tend to follow the stock market and financial indicators more closely than the other factors,” White says. “However, we’re seeing a sustained pattern where cash buyers remain particularly active in the market, continuing to engage in significant transactions regardless of other factors. This cash buyer resilience has become a defining characteristic of the luxury segment, consistently driving demand and transaction volume even as other market segments experience more volatility.”
Despite the buoyancy of the luxury property market, the 2025 Mid-Year Sotheby’s International Realty agent survey revealed that the top concerns for homebuyers this year are inflation and interest rates. Other issues that may influence their real estate decisions include the global political situation, climate change and tax reforms.
This villa in Sardinia sits on the seafront and broke the record for Italy’s most expensive residential sale, selling for more than €160 million (US$172.8 million).
Italy Sotheby’s International Realty
Policies and politics and the luxury property market
Some observers have been concerned that tariffs and immigration policies could harm the U.S. real estate market (see Steady Course), with analysis from The New York Times estimating in April 2025 that, if fully enforced, tariffs and limiting immigration would add 16% to labor costs and 31% to materials costs for homes. Of course, that estimate may change depending on the specific tariffs and how long they last, along with immigration enforcement policies.
“Tariffs on building materials and other items used to build and furnish homes raise the cost of construction, remodeling and even moving,” says Robert Dietz, chief economist, National Association of Home Builders (NAHB). “NAHB estimates indicate that the initial rounds of the tariffs would raise the cost of construction by up to US$10,000 for a typical single-family property and even more for high-end homes.” Tariffs on construction materials also increase the cost of rebuilding homes, which ultimately will raise insurance costs for homeowners, Dietz says.
“But in times of uncertainty, real estate becomes even more important as an asset,” Hepp says. While she doesn’t anticipate tariffs having as big an impact on luxury real estate as has been suggested, she does think there may be a spike in prices for some luxury materials as high-end homes destroyed by wildfires in California and floods in North Carolina and Florida are rebuilt (see Recovery Efforts for more about the impact of natural disasters on homebuyers).
How generational trends are shaping housing purchases
Aside from policy changes, generational trends among buyers and sellers demonstrate the increasing importance of equity among purchasers, according to NAR’s 2025 Home Buyers and Sellers Generational Trends report. Gen Xers (born between 1965 and 1980) had the highest-earning homebuyers, with a median income of US$130,000 in 2023, and they purchased the largest homes, along with younger millennials (born between 1990 and 1996), at a median of 2,000 square feet. These younger generations also had the most diverse family structures, with Gen X buyers the most likely to purchase a multi-generational home at 21%, and younger millennials having the highest share of unmarried couples buying homes at 13%.
Sellers hoping to appeal to these demographics need to know how to highlight the flexibility of their properties. “Gen Xers are today’s sandwich generation,” says Jessica Lautz, NAR deputy chief economist and vice president of research, about the report’s findings. “They are purchasing multigenerational homes to accommodate aging relatives, children over the age of 18 and even for cost savings. While Gen X are purchasing at the highest household incomes, they may still feel the squeeze as they aim to find a home that serves everyone.”
This mountainside sanctuary in Aspen, Colorado is accented by hand-scraped beams and walnut flooring.
Aspen Snowmass Sotheby’s International Realty
Spotlight on U.S. luxury property markets
The first two months of 2025 were among the busiest starts to the year seen in the New York City luxury property market in the past 20 years, says Juliette R. Janssens, global real estate advisor, Sotheby’s International Realty - East Side Manhattan Brokerage. “We saw momentum pick up after the election due to pent up demand and increased liquidity from previous stock market performance,” says Allison B. Koffman, global real estate advisor at the same office. “We have experienced bidding wars at every price point, from US$2 million to US$10 million and up.”
Janssens says condos on the Upper East Side are particularly sought after, along with those on the Upper West Side and downtown. “Buyers favor condos because they’re less restrictive—you can rent them out or buy with a trust or limited liability company—unlike co-ops. Condos have been the favorite child for a while, especially for a new generation of buyers who are less concerned about being at a certain address than earlier generations.”
In addition to profiting from the stock market, many New York City buyers in the financial industry have used their recent bonuses to buy real estate, Koffman says. “New luxury buildings all over the city have already sold their best apartments just from buyers looking at floor plans.”
In Aspen, Colorado, a severe lack of inventory and restrictions on new development have kept prices high, says Tim Estin, global real estate advisor, Aspen Snowmass Sotheby’s International Realty. Land use rules have restricted new homes to a maximum of 9,250 square feet, and new restrictions may reduce that to 8,750 square feet in 2026. “Inventory is consistently 40% to 50% less than it was before the pandemic,” he adds. In February 2019, there were 382 units for sale in Aspen compared to 187 listings in February 2025.
Estin also notes that the “billionaire effect” in Aspen keeps prices high. “Whenever we have a big high-end sale, the net effect is that it pushes average prices higher. There’s a gravitational force for prices to keep rising.” The median sale price for a single-family home in Aspen was US$13.4 million in 2024, compared to US$9.97 million in 2020.
In the Bay Area, California, the housing market flattened in 2024 but started this year with new momentum and a new mayor, who is generating optimism, says Kara Warrin, global real estate advisor, Golden Gate Sotheby’s International Realty, serving Marin County and San Francisco.
“Our luxury property market isn’t impacted by interest rates because 85% of transactions are with cash,” Warrin says. “Our team sold more than US$65 million between October and December 2024, with an average sale price of US$6 million. The buyers tend to be local people who want something bigger and better and have the cash to pay for it.”
Inventory is low in San Francisco and in nearby Marin County locations with ferry access to the city, such as Sausalito, Tiburon, Belvedere and Mill Valley, Warrin adds. One trend that helps buyers in the area is less competition from foreign investors. “The strong dollar and political climate in the U.S. have kept our international buyer pool smaller,” she says. “Many of our buyers in the tech industry have done well and need to be in the Bay Area, but we also have a ‘silver wave’ of sellers and buyers. They are usually long-term business owners or people who inherited money and want to downsize now that they are in their 60s and 70s.”
Both groups have lots of purchasing power, with the older buyers looking for a penthouse with a view or smaller single-level living and younger families looking for single-family homes. “The luxury property market will likely stay extremely strong in the Bay Area, with homes selling quickly for what they are worth but not at a crazy rate of appreciation,” Warrin says.
One of San Francisco’s only historic waterfront compounds, The Valhalla 1893 in Sausalito, California, has hosted the likes of Marlon Brando and John F. Kennedy.
Golden Gate Sotheby’s International Realty
Median sales prices in Aspen, Colorado
US$9.97 million for a single-family home in 2020 US$13.4 million for a single-family home in 2024
Source: Aspen Snowmass Sotheby’s International Realty
Financing Options
When U.S. mortgage rates were historically low between 2009 and early 2021, savvy HNWIs jumped at the opportunity to invest in real estate with “jumbo loans.” This term refers to mortgages that exceed the limits set by the government-backed funding agencies Fannie Mae and Freddie Mac. In 2025, that means loans of US$806,500 or more in most markets, or US$1,209,750 in high-cost localities.
Today, wealthy homebuyers are still just as likely to invest in property around the globe, but they are more likely to pay cash now that borrowing costs are higher. According to the 2025 Mid-Year Sotheby’s International Realty agent survey, 88% of HNWI clients across the globe prefer to purchase real estate with cash.
“Our market is 80% cash, but the few clients who borrow funds to buy a property usually pay interest rates well below the standard rate,” says Dan Dockray, global real estate advisor, LIV Sotheby’s International Realty in Colorado. “These are buyers who have a strong relationship with their banks, which will typically shave at least a point off the market rate.”
In early 2025, these borrowers typically paid 5% or less on a jumbo loan, compared to nearly 7% for other borrowers, he says. “Some cash buyers are actually leveraging their investments and may be pulling US$2 million or more out in cash against their assets.”
Unlike a jumbo loan, which can take weeks to access because of documentation requirements and can generate substantial borrower fees, loans against investments can often be approved in one day, says Keith M. Bloomfield, founder and CEO of FFT Wealth Management, a New York City–based firm that serves ultra-high-net-worth individuals (UHNWIs).
“Our margin rates are lower than the prevailing jumbo mortgage rate, and borrowers can leverage up to 50% of their portfolio,” Bloomfield says. “It’s all a numbers game based on interest rates, their return on investments and whether someone needs capital for their business or another expense.”
Financial institutions such as UBS, Morgan Stanley and Raymond James have excellent programs for financing property purchases for people who keep their investment portfolio with them, says Brian Weiner, founder and CEO of the Family Office Resource Group, a wealth management firm that also serves UHNWIs. “The challenge with this approach is that securities portfolios tend to fluctuate,” Weiner says. “In the event of a serious market correction, the borrower may need to cover any shortfall. Another concern is that you’re committed to that financial institution, so making a change might not be so easy.”
An alternative option is an intra-family loan, often made via a trust or a limited-liability company, which allows UHNWIs to finance purchases made by other family members. “The rates for such loans are usually much lower than traditional mortgages, which can lead to amazing cost savings,” Weiner says.
For example, as of March 2025, the interest rate established by the IRS for an intra-family loan of more than nine years was 4.81%, compared to 6.31% for a traditional mortgage.
Top transaction methods for luxury property
Source: 2025 Mid-Year Sotheby’s International Realty agent survey
In cash
Borrowing against investments
Leveraging equity in other homes
Other
Economic factors vary according to the level of wealth of the client. “For UHNWIs, property purchases and sales are purely a lifestyle choice,” Dockray says. “At a lower price point, such as the US$5 million range, we tend to see more activity when the stock market rises. Buyers below that point are more likely to pay attention to interest rates.”
However, many entrepreneurs drive real estate transactions, so inflation or other economic factors that impact their business could influence their real estate decisions. Successful transactions often hinge on clients sharing information about their banking relationships early in the process. Understanding whether financial institutions can authorize and facilitate loans in specific markets—specifically in cross-border scenarios—can help prevent complications.
“Agents need to know which lenders can work with wealthy buyers and what they can offer, which changes often,” Dockray says. When a buyer needs to finance their purchase, it’s best to use local lenders whenever possible. The worst situation is when someone has an out-of-state personal banker, who says they can execute in our market but at the last minute they can’t. It can derail a deal to ask a seller to wait while your buyer scrambles to rearrange their financing.”
The factors that influence global luxury property buyers
Economist Hepp also believes that foreign investment in U.S. real estate could be influenced in part by geopolitical circumstances. “While some foreign buyers will continue to be attracted to investing in U.S. real estate because the country is considered a stable economy, others may be less likely to invest here because of changes in immigration policies,” she says. “It will probably balance out in the coming years.”
In terms of cross-border luxury transactions, there has been an increase in activity from U.S. buyers looking to purchase properties in Europe, a trend that was also seen during the pandemic, White says. “Market forecasts from our affiliate leaders remain positive for the coming months. This optimism is particularly strong in markets such as Italy, Portugal, Dubai, the U.K., France and Spain, as well as in countries offering fiscal tax benefits and residency programs, such as Malta and Switzerland.”
Cross-border transactions were also driven by the strong performance of the U.S. dollar at the start of the year. Outside of Europe, U.S. luxury property buyers are seeking homes in locations such as Japan and Mexico due to currency advantages. “We are seeing a growing luxury market in Mexico that is attracting more and more buyers from the U.S.,” White says. “San Miguel continues to grow substantially, as do other mostly coastal markets, such as Los Cabos, Playa del Carmen and Puerto Vallarta.”
“ MARKET FORECASTS FROM OUR AFFILIATE LEADERS REMAIN POSITIVE FOR THE COMING MONTHS
”
Philip A. White Jr., president and CEO, Sotheby’s International Realty
Trends in Europe and the U.K.
The primary motivations for Americans buying overseas appear to be economics, politics, lifestyle, potential investment opportunities and the favorable exchange rate, White says. “Demand from U.S. buyers was robust in 2024, particularly in markets that aligned with their motivations. Portugal continues to be a compelling destination, with U.S. buyers becoming the top foreign nationality in 2024. In Italy, the U.S. buyer share has significantly increased since 2023, fueled by the strong dollar and a new lump-sum tax regime. Our affiliate in Paris, France, Propriétés Parisiennes Sotheby’s International Realty, also noted that 70% of its foreign buyers were from the U.S. in 2024.”
Demand for prime properties in central Paris remains strong, says Delphine Gibert Avitan, director, Propriétés Parisiennes Sotheby’s International Realty. “High-profile sales have continued, particularly in the most sought-after arrondissements, but buyers are showing increased selectivity, favoring properties that offer a unique architectural or historical character. There’s a continued preference for properties with outdoor spaces and terraces, along with high demand for meticulously renovated turnkey residences. There’s also an increasing focus on energy-efficient and historically preserved properties due to evolving regulations and buyer preferences.”
In April 2025, Alexander V. G. Kraft, chairman and CEO, Sotheby’s International Realty France and Monaco, secured the Maybourne Residences in Saint-Germain-des-Prés, one of the most prestigious areas of Paris. The residences are exclusively listed by Propriétés Parisiennes Sotheby’s International Realty and are the first private homes in Paris that will benefit from hotel services. They are also the most expensive, with a €60,000 per square meter (US$5,750 per square foot) listing price. “These developments offer Americans not just properties but lifestyle experiences in prestigious locations,” White says.
Residents of the Maybourne, in Saint-Germain-des-Prés, Paris, have access to the luxury spa at the adjoining hotel.
Sotheby’s International Realty France and Monaco
The Paris residences represent a global trend among luxury property buyers who are looking for hotel-like amenities for their private homes.
Lower interest rates in Europe may encourage some HNWIs to re-enter the market there, Gibert Avitan adds, although cash transactions dominate the ultra-luxury sector. “Geopolitical uncertainty tends to reinforce the appeal of stable luxury markets such as Paris, London and major European capitals.”
Sustained interest in Paris among American buyers, particularly those motivated by lifestyle and long-term investment potential, is matched by the appeal of London. “Buyers in London in 2024 did very well because there was lots of supply and the market was unsettled before our general election,” says Becky Fatemi, executive partner, United Kingdom Sotheby’s International Realty. “There’s more clarity globally now that the U.S. and U.K. elections are behind us, and there are still good opportunities in the U.K. as we’ve experienced a significant exodus of foreign buyers.”
Some wealthy people from Europe, the Middle East and Africa have left the U.K. since reforms in 2024 eliminated long-standing tax benefits for residents whose permanent home is outside the U.K. In addition, in November 2024 the new center-left U.K. government imposed a 2% surcharge on home purchases made by non-residents and an extra 5% on buyers who own more than one residential property.
In 2024, Americans made up 20% of foreign buyers in the U.K, according to Fatemi. The market segment between £2 million and £10 million (US$2.6 million to US$13 million) remains active, with foreign buyers predominantly purchasing properties as a pied-à-terre or investment assets for family members. In addition, interest rates are lower in the U.K. Robust bonuses for people in the financial sector also led to a boost in purchases at the end of 2024 and in early 2025.
“One reason Americans were buying in the U.K. is the strength of the dollar compared to the pound,” Fatemi says. “Even though they might have to pay stamp duty of as much as 19%, the strength of the dollar and lower interest rates offset the expense.” She says prices are the highest they have ever been, so buyers from Dubai and Abu Dhabi are also looking to London for investment opportunities.
“ THERE’S MORE CLARITY GLOBALLY NOW THAT THE U.S. AND U.K. ELECTIONS ARE BEHIND US
”
Becky Fatemi, executive partner, United Kingdom Sotheby’s International Realty
Trends in Australia and New Zealand
Australia’s luxury real estate market also showed robust performance in 2024. “Sydney Sotheby’s International Realty achieved a record year in 2024,” White says. “Our brand also has plans for continued expansion in Australia in the coming months.”
Sydney remains one of the world’s most expensive luxury property markets. Other capital markets in Melbourne, Perth and Brisbane represent attractive alternatives for luxury property buyers seeking value and lifestyle appeal.
Melbourne Sotheby’s International Realty set a record for the South Yarra neighborhood with the sale of a contemporary home for just under AU$26 million (US$16.5 million), the highest recorded price since 2018 and a new record per square meter at AU$41,000 (US$26,127). “I believe we’ll continue to see this trend for strong demand for luxury real estate by the ultra-rich and finite supply in highly sought-after suburbs of Melbourne, which offer world-class amenities,” says Antoinette Nido, managing director, Melbourne Sotheby’s International Realty.
An architectural icon in Toorak in Melbourne, Australia, with six bedrooms and ornamental gardens.
Peninsula Sotheby’s International Realty
Queenstown, New Zealand, is home to this secluded lakefront residence.
New Zealand Sotheby’s International Realty
In Australia’s major cities, demand is being driven by UHNWIs and an increasing appetite for prestige property investments. Market forecasts from data analytics firms Cotality and Domain suggest a 5.3% annual property value growth rate for 2025 compared to 2024, along with sustained interest in landmark residences and branded developments. While foreign purchases of existing homes are on hold for two years from April 1, 2025 the same restrictions do not apply to new developments, which represent ownership and investment opportunities for overseas purchasers.
“In New Zealand, a significant market development emerged in March 2025 with updates to the Active Investor Plus Visa Scheme,” White says. “This policy change now permits foreigners to own homes based on eligibility related to investment thresholds and physical presence requirements. New Zealand Sotheby’s International Realty was involved in the top three national sales in 2024 and six of the top ten, suggesting strong underlying market momentum.”
Trends in Hong Kong and Singapore
Property markets in China struggled in 2024, and measures have been taken to deliver stability. “The government has eliminated excessive stamp duties and introduced programs to attract wealthy individuals, family offices and qualified professionals, encouraging a new wave of potential buyers from the Chinese mainland, Southeast Asia and the Middle East,” White says.
Singapore’s luxury housing market was noticeably slower until the summer of 2024, when interest rate cuts by the U.S. Federal Reserve encouraged economic confidence among homebuyers and investors, says Sueann Lye, global real estate advisor, List Sotheby’s International Realty, Singapore.
“There was a noticeable flow of wealth into the Singapore market in 2024, indicated by higher sales in the second half of the year,” Lye says. “On a per-square-foot basis, the average price of so-called ‘good-class bungalows’ rose 4% year-over-year from 2023 to 2024. In 2025, we expect the good-class bungalow market to strengthen and prices to rise marginally due to the limited supply.” A “good-class bungalow” is a planning designation that indicates a single-family home located in one of 39 residential areas and on a lot of at least 1,400 square meters (15,070 square feet). They are typically the most luxurious and costly homes in Singapore.
However, luxury apartments did not perform as well, with total sales down 30% in 2024 compared to 2023, Lye says. She anticipates the current performance of apartments to remain the same in the second half of 2025. “This could be attributed to the lack of new luxury projects for sale in 2024 and to the hike in additional buyer’s stamp duty (ABSD). Since April 2023, foreign buyers of residential properties have to pay 60% of the sales price, which is a deterrent. In addition, ABSD rates were raised for citizens and permanent residents buying second properties from 20% to 30%.” As a result, luxury properties in Singapore are increasingly being purchased by citizens and permanent residents as their primary residence.
“We have noticed an increasing number of buyers from the U.S., Norway and Switzerland over the past two years,” Lye says. “Under their respective free trade agreements, nationals and/or permanent residents from these three countries who buy residential properties in Singapore, as well as those from Iceland and Liechtenstein, will be accorded the same tax treatment as Singaporean citizens,” Lye says.
More broadly in Asia, the Sotheby’s International Realty brand opened an office in the Philippines in March 2025 to widen its reach in the region. “The luxury residential real estate sector in the Philippines has seen steady growth fueled by increased demand from affluent buyers and investors,” White says. “As the financial center of the country and a key hub for multinational corporations, the city of Makati is the prime location for high-end residences offering premium amenities and security.”
Trends in the Middle East
Despite ongoing global economic and geopolitical challenges, the luxury real estate sector in the Middle East remains robust, says Zhanna Yerkozhanova, general manager, Qatar Sotheby’s International Realty. “HNWIs are actively purchasing exclusive properties in the top locations. This year, foreign investment is anticipated to rise due to favorable exchange rates and government initiatives attracting affluent buyers.”
Approximately 6,700 millionaires are estimated to have migrated to homes in the UAE in 2024, with Dubai recognized as a luxury property magnet. Similar to other high-end markets, Dubai continues to struggle to keep up with demand. An array of luxury mansions and penthouses that range in price from US$60 million to more than US$120 million are under construction or recently completed in Dubai for buyers from Europe, Asia and the Americas, according to a February 2025 Bloomberg report.
Branded residences in the Gulf Cooperation Council (GCC)—which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates—are anticipated to stay strong as buyers seek not just luxury but integrated experiential lifestyles. “Qatar is uniquely positioned as a leading Middle Eastern economy, benefiting from a strong banking system, no personal income tax and the possibility for investors to obtain permanent residency,” Yerkozhanova says. “Qatar’s strategic vision and infrastructure investments position it for continued interest and potential growth in the luxury sector, along with its position as a gateway between Europe and Asia.”
Oman, known as a tourism destination for its beautiful landscapes, also has a stable economy bolstered by oil reserves and progressive government policies, which has led to its emergence as a hub for international business, capital transfer and immigration. “Our exclusive projects—the Residences at the St. Regis Marsa Arabia Island, the Pearl—Qatar and the Residences at the St. Regis Al Mouj Muscat Resort—consistently attract international buyers,” Yerkozhanova says.
A nine-bedroom mansion located in Emerald Hills with views of the Dubai skyline.
Dubai Sotheby’s International Realty
Market resilience
The luxury property market has demonstrated remarkable strength even in the face of broader economic challenges, as the Sotheby’s International Realty brand demonstrated in 2024, White says. “Luxury real estate has consistently led the market and outperformed the industry. Sales are taking place at a steady pace, and we anticipate this momentum to continue. Affluent buyers remain active, and the demand for high-end properties remains strong.”
In 2025, White anticipates sales in the global luxury property market will continue to show growth. “Active housing inventory is rising in most markets on a year-over-year basis, but some still remain tight,” he says. According to NAR data released at the end of May 2025, housing inventory in the U.S. climbed nearly 21% from a year ago. “Overall, we are optimistic about the future of the global luxury property market. The combination of strong demand, impressive sales growth and the resilience of the luxury segment positions it well for continued success in the coming months.”
As luxury property buyers and sellers contemplate their next moves for 2025 and beyond, they are likely to focus attention on markets that consistently demonstrate resilience in any economic climate.
Steady Course
Luxury real estate presents resilient opportunities amid market shifts, experts say
On-again, off-again tariffs, stock market volatility, stubborn inflation and currency fluctuations are likely to continue to affect global real estate markets in the coming months, but they could still present opportunities for some buyers.
“Despite elevated interest rates and slower overall sales activity, the high-end real estate segment continues to show resilience,” says Odeta Kushi, deputy chief economist, First American Financial Corp., a provider of title, settlement and risk solutions for real estate transactions. “Wealthy homebuyers are often motivated by lifestyle, portfolio strategy or long-term bets on a specific market, not just short-term cost considerations. And, while headwinds such as trade tensions or financial market volatility may shift the pace or location of demand, they rarely erase it.”
The upper end of the housing market has consistently performed well in the past few years, attributed in part to strong stock market performance, says Lawrence Yun, chief economist, National Association of REALTORS® (NAR).
While noting that market dynamics might temporarily slow activity, Yun remains optimistic about luxury real estate’s long-term trajectory. “We’re starting to see a little hesitancy at the upper end, mostly because of the uncertainty about where the stock market will be in a month or next year,” Yun says. “But in the big picture, there’s sizable pent-up demand for trade-up buyers. In addition, even with a stock market correction, there’s plenty of household wealth being transferred to the next generation that will add to the demand for luxury housing.”
This estate in Bradbury, California, was meticulously designed following Feng Shui principles and includes a 100ft pool and garage for 20 cars.
Pacific Sotheby’s International Realty
Tariffs, investors and luxury housing
“Residential construction costs, already more than 40% higher than pre-pandemic levels, could be further strained by sustained tariffs,” Kushi says. Buyer preferences may shift toward turnkey homes that avoid the added cost and delay of new construction or major renovations, she says.
“If tariffs continue to increase construction costs, that will likely jeopardize profits on the already slim margins in the building industry,” says Joel Berner, senior economist, Realtor.com®. “It’s likely more builders will pivot to higher-end homes where the profit margins are a little better, which would increase the inventory of luxury homes.”
“Among the top 10% of wealthiest households, real estate represents 18.7% of their total investment portfolio, down from 19.9% two years ago,” according to a Realtor.com® April 2025 report, Berner says. That percentage may be higher after the most recent stock market correction, he adds.
Stock market volatility can have a dual effect on the luxury housing market, Kushi says. “On one hand, sharp swings in equities can prompt some high-net-worth individuals to delay big purchases due to uncertainty,” she says. “On the other, real estate—especially in prime markets—might be seen as a safer, more tangible store of value.”
The US$1-million-plus segment has continued to grow in 2025, now comprising nearly 13% of all recent existing-home sales, according to April 2025 data from NAR, Kushi points out. “This suggests many affluent buyers still see real estate as a safe place to park money, offering both investment potential and the value of a place to live,” she adds.
“When the stock market experiences severe swings, wealthier households in the U.S., and globally, look for a more tangible, secure asset,” Yun says. “If the stock market continues to be volatile, people are more likely to invest in real estate as a hedge against uncertainty,” he says.
Slowdown risk, interest rates and the luxury market
Berner anticipates the U.S. Federal Reserve Board (the Fed) to hold interest rates steady at least until several months of better inflation numbers are reported. Tariffs are expected to drive prices higher, which works against lowering interest rates, he says.
However, slowdown risks have risen due to evolving trade policies, Berner continues. “[It] isn’t necessarily bad for the housing market, with the exception of the 2008-2010 housing-led downturn. Periods of economic cooldowns usually generate lower interest rates, which has a positive overall impact on the housing market, even the upper end.”
Currency fluctuations and cross-border purchases
Inflation in May remained steady, according to a June 2025 report in The New York Times, and most economists anticipated that the Fed will continue to hold interest rates at 4.25%–4.5% for the rest of 2025. Meanwhile, trade wars led to a weakening dollar—down 9.07% for the year as of June 18, 2025, according to The Wall Street Journal.
In mid-May, officials in China and the U.S. agreed to a 90-day pause on new tariffs, according to a May 2025 report by AP News. As part of the agreement, the U.S. dropped its tariffs on China to 30% from the previous 145%, while China dropped its tariffs on U.S. products from 125% to 10%.
Overseas investor purchases in the U.S. slowed when the dollar was strengthening, which made it more costly to buy in the U.S., Yun says. However, a weaker dollar could make the U.S. more attractive to real estate investors, Berner says.
“When a local currency weakens, international buyers with stronger currencies may find better value, effectively boosting their purchasing power,” Kushi says. “But it’s not just about pricing—currency shifts often reflect broader economic signals.”
“The President’s ‘Gold Card’ proposed visa program, which offers a path to citizenship for people who invest US$5 million, could potentially boost high-end demand for U.S. real estate,” Yun says.
Continued volatility on many fronts is anticipated in 2025, but the luxury housing market is likely to be a source of continued opportunity.
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