Endurance TEST
Luxury real estate holds its appeal as an investment—and a lifestyle.
Whether driven by economic opportunities or the desire for a lifestyle to share with friends and family, property purchases by high-net-worth individuals (HNWIs) in 2025, when the luxury real estate market outperformed the overall housing market, position the sector for continued strength, says Philip A. White Jr., president and CEO, Sotheby’s International Realty.
“The general real estate market was more impacted by elevated interest rates and affordability issues such as higher prices,” White says, “but the luxury real estate market is positioned for continued outperformance, building on 2025’s robust foundation, which included areas seeing increased inventory, growing international homebuyer activity and a larger percentage of all-cash sales, particularly at the higher end.”
While market performance depends on a variety of factors, the Sotheby’s International Realty affiliated agents who primarily sell homes in the US$10 million and above range were the most optimistic about their global markets for 2026, according to the 2026 Sotheby’s International Realty agent survey.
“We expect global sales to further strengthen, as luxury property buyers are less constrained by geography,” White says. “The fundamentals supporting luxury real estate remain strong. We are seeing sustained wealth creation at the high end, inventory remains constrained in premier markets with some growth, and lifestyle-driven demand shows no signs of stopping.”
In the U.S., the contrast between the luxury and general housing markets is significant, according to Lawrence Yun, chief economist and senior vice president of research at the National Association of REALTORS® (NAR). “The upper end has seen huge home equity gains, so if homeowners in that price range decide to sell, they have additional buying power,” he says. “We’ve also seen the stock market reach an all-time high [in October 2025], which can loosen up the purse strings.”
Homebuyers at the very high end of housing markets tend to be impervious to macroeconomic factors, says Mark Zandi, chief economist at Moody’s Analytics. “They’re in great financial shape,” he says. “At the lower end of the luxury market spectrum, homebuyers are a little more sensitive to their overall net worth and the stock market.”
The threshold for a luxury home in the U.S. now starts at US$1.3 million nationally and is much higher in some markets, according to research released in September 2025 by Realtor.com®, which defines “entry-level” as within the top 10% most expensive homes.1 “High-end” luxury, within the top 5% of the market, starts at US$2 million nationally and “ultra-luxury,” the top 1%, starts at US$5.4 million. In 2016, the entry point for a luxury home nationally was just US$796,922, according to Realtor.com®, while today in Los Angeles, California, entry-level luxury starts at US$3.9 million, and in New York City at US$2.8 million.
Despite the potential headwinds of slower job growth and inflation, Yun is optimistic about the prospects for the upper end of the housing market in 2026. If mortgage rates continue to decline, as they have according to a November 2025 report by mortgage company Freddie Mac,2 he anticipates a surge of demand.
“Interest rate stability, if achieved, could unlock significant additional homebuyer activity,” White says. “Ultra-high-net-worth individuals [UHNWIs] are less rate-sensitive, but we know they are inclined to be more active when financial markets demonstrate stability.”
Yun anticipates that, following the rate cuts in September, October and December 2025, the Federal Reserve will continue to lower interest rates incrementally, which could in turn help lower mortgage rates. “I expect the economy to continue to hum along nicely, with stable unemployment rates and respectable 2% GDP growth into at least the middle of 2026,” he says.
Stock market performance also had an impact on luxury homebuying. “The luxury housing market stalled for a short time in March 2025, when the stock market corrected, but since then it has been outperforming the lower end,” Yun says. “I can’t predict exactly what will happen with the stock market, but based on its current performance, the outlook for luxury real estate in 2026 is bright.”
A luxury penthouse at the Four Seasons Private Residences in Abu Dhabi, United Arab Emirates, broke records when it sold for US$54.5 million in 2025.
Abu Dhabi Sotheby’s International Realty
“ RECENT RECORD-BREAKING SALES DEMONSTRATE THE PROPERTY MARKET’S STRENGTH AND APPETITE FOR PREMIUM PROPERTIES.
”
Philip A. White Jr., president and CEO, Sotheby’s International Realty
Despite some volatility, the overall strong stock market performance of the last two years has increased the net worth of households, which in turn benefits the luxury real estate market, agrees White. “We’re also seeing that luxury homebuyers are younger, which is a function of wealth creation and the transfer of wealth to a new generation. This is in contrast to the overall housing market, where homebuyers are older.”
Another trend is that periods of high inflation can spur the sales of luxury properties as a hedge. Values typically rise along with inflation, adding to profitability for home sellers, and inflation levels have hovered around 3%, according to data released by the U.S. Department of Labor in October 2025.3
“Recent record-breaking sales demonstrate the property market’s strength and appetite for premium properties,” White says. “In downtown Manhattan, New York, a penthouse is under contract for US$87.5 million, and a co-op in San Francisco, California, sold for US$24 million. In Abu Dhabi, a penthouse in the Four Seasons Private Residences at Saadiyat Beach—which is still under construction—sold for US$54.5 million, well above the previous record price of US$37.3 million set in 2024, according to Abu Dhabi Sotheby’s International Realty. These transactions, as well as a record sale in Old Greenwich, Connecticut, for US$21 million and a record sale for US$50 million in San Diego, California, signal sustained demand at the highest levels.”
In the general housing market, the government-backed mortgage provider Fannie Mae predicts that home sales—including existing homes and new-builds—will rebound in 2026, rising an estimated 9.2% over the previous year, according to a September 2025 report by Real Estate News.4
The impact of inherited wealth
Wealth creation comes from a variety of sources, including business success, investment gains and, increasingly, inheritance. Generational wealth transfers should continue to drive luxury real estate demand, building on 2025 flows that reached an estimated US$6 trillion across wealthy nations, the equivalent of 10% of global GDP, according to research published in June 2025 by The Economist.5 In Italy, for example, inheritances represent 20% of the country’s GDP.
An estimated US$124 trillion will now transfer intergenerationally through 2048, mainly between the Silent Generation (born 1928-45) and Baby Boomers (born 1946-64) to younger generations, according to a Q1 2025 report by Cerulli Associates, a research and consulting firm.6 Included in the total figure is an estimated US$25 trillion in real estate, according to Federal Reserve data reported by CNBC in August 2025.7
This generational wealth transfer, which a February 2025 report in The Economist terms “inheritocracy,” is creating an emerging class of HNWIs who are influencing global real estate markets. In the U.S., where asset values—including real estate and the stock market—have risen in recent years while inheritance taxes have fallen, the number of wealthy individuals continues to grow, according to the report.8
Inherited wealth in 2025
US$6 trillion to be inherited worldwide = 10% of global GDP
Source: “How to Invest Your Enormous Inheritance,” The Economist, June 2025
Cryptocurrency and luxury real estate
Another source of wealth that is beginning to impact the luxury property market is cryptocurrency. In 2021, a US$22.5 million penthouse sale at Arte Surfside in Miami, Florida, made headlines as the first publicly known example of a crypto purchase, as reported by Forbes in June 2021.9 In 2024, Neyshia Go, global real estate advisor, Sotheby’s International Realty - Beverly Hills Brokerage, sold a newly built house in Beverly Grove for US$4.925 million, with the buyers cashing in their crypto investment for the purchase. Since then, some sellers of luxury properties in Dubai, California and New York have expressed a willingness to accept cryptocurrency.
In Dubai, 30% of UHNWIs hold crypto assets, which is having an impact on the real estate market there, according to a February 2025 report by Forbes, citing research by the residence and citizenship consultancy Henley & Partners.10 Loans made with Bitcoin as collateral, estimated at US$8.58 billion today, are expected to reach US$45.27 billion by 2030, according to a June 2025 report by Realtor.com®, and crypto loans are particularly popular for second homes.11
However, Zandi warns that the increased use of cryptocurrency for home purchases could generate volatility in the luxury housing market. “Crypto prices are subject to wild swings, which could result in similar variations in luxury home demand,” he says.
Conversely, Yun argues that this volatility might be offset by the expanding homebuyer pool. “Major financial institutions are investing in cryptocurrencies, as are younger people,” he says. “Finding a way to include those assets in underwriting widens the pool of homebuyers, which could be beneficial to the luxury housing market.”
The regulatory landscape around cryptocurrencies is evolving rapidly. Since the current administration took office in January 2025, there have been moves to encourage the use of digital assets in a variety of ways, such as the U.S. Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission coordinating efforts to facilitate crypto trading, according to a joint statement issued in September 2025.12
In June 2025, the Federal Housing Finance Agency, which oversees the mortgage providers Fannie Mae and Freddie Mac, ordered the agencies to prepare a proposal that would allow cryptocurrency holdings to count as an asset for mortgage applicants, according to a report by AP News.13 And while that policy has yet to be enacted, a handful of private lenders already allow it, as reported in August 2025 by Yahoo Finance.14 Otherwise, borrowers are typically required to convert their cryptocurrency holdings into dollars if they are to be included among their assets.
In the years ahead, cryptocurrency may play a larger role in the economy and real estate, since globally just over half (51%) of Gen Z own crypto assets, according to research released in January 2025 by Gemini, a finance platform.15 This compares to 35% of people of all ages globally. The research also found that nearly half (48%) of Gen Z use crypto to generate investment income, compared with 41% of all crypto owners.
This estate in Montecito, California, evokes quiet sophistication.
Sotheby’s International Realty - Montecito - Coast Village Road Brokerage
Taxes, tariffs, exchange rates and geopolitics
Tax policy changes also bode well for luxury real estate, particularly the raising of caps on state and local tax deductions, from US$10,000 to US$40,000, on U.S. federal income tax returns for 2025.
“This will be a game changer in states with higher taxes—it’s a clear additional benefit to buying a more costly home if you can deduct more,” Yun says. “Real estate agents should relay this message to their customers, especially in states with higher taxes such as New Jersey, New York, Massachusetts, Maryland, California and Washington.”
The striking modern interior of a luxury home in Tucson, Arizona.
Russ Lyon Sotheby’s International Realty
A potential wild card for the luxury housing market in the U.S. is the discussion about raising the limits on capital gains tax exclusions, Zandi says. Currently, home sellers can exclude up to US$250,000 (or US$500,000 for married couples) in capital gains on their home from their tax calculation. If the rules on capital gains exclusion change, Zandi believes it could generate more luxury property inventory.
Tariffs, a less positive policy change, typically raise inflation and lower economic growth, Zandi says. “Overall, the effective rate of tariffs in late summer 2025 was about 10%, compared to typically 2% in the past. I expect tariffs to gradually settle into an overall effective rate of 15%, which may have a negative effect on the U.S. economy into 2026 or longer.”
However, factors such as tariffs, shifting exchange rates and geopolitical dynamics have been less disruptive to luxury real estate than initially expected, White says. “The big story is really about selectivity. We’re seeing wealthy homebuyers become much more particular about where they invest. Compared to during the pandemic, we’re seeing that homebuyers are gravitating toward established luxury property markets with more solid fundamentals, rather than trying to chase speculative opportunities.”
Currency fluctuations are also creating interesting dynamics, he says. “Real estate markets in foreign countries that seemed expensive six months ago might look attractive now, depending on exchange rates. Additionally, ongoing geopolitical tensions have driven homebuyers toward regions they view as more secure and stable, while tariff uncertainty is making some international homebuyers more cautious about timing their purchases.”
International viewpoints and local trends
Agents within the Sotheby’s International Realty network say that political and economic stability are extremely important factors, along with security and privacy, in a homebuyer’s choice of where in the world to buy their residence, according to the 2026 Sotheby’s International Realty agent survey.
“We continue to see luxury real estate buyers increase their portfolio of homes in different areas, both in the U.S. and internationally,” White says. “Our collaboration with Concierge Auctions has shown us that luxury homebuyers often bid on multiple properties across various locations. This global perspective reinforces our view of the real estate market as a unified landscape, where buyers consider investments not just locally but internationally.”
However, he believes that not all high-end real estate markets will perform equally. “We expect continued geographic selectivity. Prime urban property markets with strong economic drivers, world-class amenities and limited supply will continue to outperform.”
As always, real estate trends are highly localized. “The inventory story varies dramatically by price point and location,” White says. “We’re seeing opportunities emerge in certain segments and markets—in Washington, D.C., and Houston, Texas, in the U.S., and abroad in Portugal, Spain and Thailand—which are showing improved inventory levels compared to recent years, particularly in the luxury range. The key for homebuyers is to understand these dynamics—what appears to be a homebuyer’s market in one segment may still be highly competitive in another, even within the same geographic area.”
While there are luxury properties in numerous areas within the U.S., there are some locations with a particularly high concentration. Seven of the top 10 most-expensive zip codes in the U.S. are in Southern California, but Fisher Island in Miami Beach is the most expensive, according to an August 2025 report by Realtor.com®.16 The other two East Coast zip codes on the list, Bridgehampton and Water Mill, New York, are both in the Hamptons on Long Island. These locations represent “ultra-luxury territory, where virtually every home on the market is a multi-million-dollar listing and the majority are among the top 1% most expensive listings within the U.S.—a tier for those priced at US$5.7 million and up,” White says.
Lifestyle is driving choice
In the 2026 Sotheby’s International Realty agent survey, more than half (60%) of affiliated agents said that lifestyle had been a more important factor to luxury homebuyers than in previous years. The emphasis on lifestyle was particularly important to homebuyers in Oceania, the Caribbean, South and Latin America, and Africa and the Middle East.
“Lifestyle-driven property markets are certainly thriving,” White says. “Ski destinations continue to show exceptional strength. In fact, Aspen Snowmass Sotheby’s International Realty listed a US$300 million estate in August 2025—with 74 acres and just a mile from town— which is the most expensive home ever listed in the U.S., according to an August 2025 report by Forbes.17 And in October 2025, Puerto Rico Sotheby’s International Realty listed a multigenerational estate for US$65 million in Puerto Rico, which will be the highest-priced property there if it sells near the asking price, according to an October 2025 report by The Wall Street Journal.”18
“Legacy Properties Sotheby’s International Realty in Maine achieved the sale of a home near the Bush family compound in Kennebunkport for US$12 million in July 2025—after just 90 minutes on the market. This was followed by the September 2025 sale of Bette Davis’s former estate in Cape Elizabeth, Maine, for US$13.4 million, marking the state’s priciest deal in a decade.”
“We’re also seeing strong performance in property markets that combine multiple lifestyle elements, such as ski-to-golf communities or wine country properties,” White says. “Additionally, the wellness trend has evolved since the pandemic, with homebuyers prioritizing in-home spas and hotel-style amenities, particularly in branded residences.”
“ WE’RE SEEING WEALTHY HOMEBUYERS BECOME MUCH MORE PARTICULAR ABOUT WHERE THEY INVEST.
”
Mark Zandi, chief economist, Moody’s Analytics
This newly built sculptural residence commands an elevated view across 120 acres near Australia’s Byron Bay.
Byron Bay Sotheby’s International Realty
Is lifestyle a growing decision-making factor for today’s homebuyers?
Most Sotheby’s International Realty affiliated agents say it is, but it varies across regions
Source: 2026 Sotheby’s International Realty agent survey
Globally
in Africa/Middle East
in South/Latin America
in the Caribbean
in Oceania
Cross-border transactions
The U.S. remains a popular location for UHNWIs looking to buy a home. According to a July 2025 report by NAR on international residential transactions in the U.S., foreign homebuyer activity for existing homes increased by 44% from April 2024 through March 2025, the first year-over-year growth since 2017.19
“From our perspective, the primary factor in its continued appeal is the relative stability of U.S. real estate, which is especially compelling amid ongoing geopolitical uncertainties,” White says. “We anticipate this continuing throughout 2026.”
Yun also believes that the current U.S. administration’s push to introduce a “golden visa” for foreigners willing to pay US$1 million for a path to citizenship will open more opportunities. “I expect to see more Chinese homebuyers in the U.S. because their economy is expanding, and there are more millionaires and billionaires there who want to invest their money in the U.S.,” he says. “The economy in India is also growing, so we’re likely to see more investors from there.”
According to NAR’s research, China remains the top country of origin among foreign real estate buyers, with Canada, Mexico, India and the U.K. rounding out the top five.
When it comes to the location of U.S. real estate investments, traditional patterns continue to hold, White says. Florida leads, accounting for 21% of purchases by foreign homebuyers, followed by California, Texas and New York, according to NAR.
The luxury housing market in central London—where this three-bedroom apartment is located, in the OWO Residences by Raffles—is bucking the trend of volatility seen in other locations.
United Kingdom Sotheby’s International Realty
“What’s particularly interesting is the growing interest in lifestyle destinations beyond the traditional gateway cities—places like Charleston, South Carolina; Nashville, Tennessee; and ski markets in Colorado and Utah,” White says. “These offer compelling value propositions for international homebuyers seeking lifestyle experiences.”
Travel patterns also reflect where people buy property, particularly second homes. “Rather than collecting properties in numerous destinations, homebuyers are focusing on places where they plan to spend extended periods,” White says. “American Express Travel’s March 2025 Global Travel Trends Report highlighted that travelers were prioritizing experiences that blend luxury, cultural immersion and personal connection—and that’s what is driving decisions.”20
Foreign homebuying activity in the U.S.
Source: National Association of REALTORS®, “International Transactions in U.S. Residential Real Estate,” July 14, 2025
rise in foreign homebuyers for existing homes from April 2024 through March 2025
of foreign homebuyers are from China, accounting for US$13.7 billion in sales
of foreign homebuyers are purchasing property in Florida
Spotlight on global markets
While global politics and economics play a role in high-end property purchases, national and regional factors are also influential, as evidenced in trends across key markets within the Sotheby’s International Realty network.
Property in Manhattan, such as this US$10.25 million apartment in Chelsea, is particularly appealing to buyers from overseas.
Sotheby’s International Realty - East Side Manhattan Brokerage
New York, New York
The dearth of inventory at the upper end of the market—above US$20 million—in New York City has kept prices high even if there are fewer sales, says Daniela Sassoun, global real estate advisor, Sotheby’s International Realty - East Side Manhattan Brokerage. “We’re seeing lots of foreign homebuyers, especially from Brazil, Argentina, the Middle East and London, in part because the U.S. dollar is cheaper,” she says. “Homebuyers have realized they can get 10% more property value for their pesos or pounds.”
Other sources of demand include younger homebuyers who have benefited from the “great wealth transfer” between older generations and their children or grandchildren, and people who moved to Florida and want or need to be in New York City more often.
“For many of our clients, a place in Manhattan is a second home where they spend three or four months every year,” Sassoun says. “These homebuyers are not bothered by inflation, but they are sensitive to the mood in general, so they’re a little more cautious now about the economic climate. They are also more likely to shy away from something that needs work because of the potential costs of construction.”
Local politics has been on the minds of property owners, too. “After the New York City mayoral primary [in June 2025], we got 15 to 20 calls a day from our clients wanting to know what the political climate would mean for home values,” Sassoun says. “We found that prices held steady under every mayor going back 25 years, despite corrections after 9/11 [in 2001], the start of the Great Recession [2007-08] and the pandemic [from 2020], which reassured them.”
Aspen, Colorado
While there are plenty of ski resorts around the world, few can match the year-round attraction of Aspen, says Mandy Welgos, global real estate advisor, Aspen Snowmass Sotheby’s International Realty.
“Some people come here in the summer only or in the winter to ski, while others like the shoulder seasons in spring and fall, when it’s quieter. What’s unusual about Aspen is that while we have all the natural beauty and outdoor mountain activities, we also have downtown, which is a mecca for art, music, high-end shopping and restaurants, alongside charm and history.”
“We never have much inventory, particularly high-caliber properties, but we always have demand,” Welgos says. “There’s a lot of competition for single-family homes and condos within walking or biking distance of downtown, but some people prefer larger estates for privacy in the mountains.”
To keep Aspen’s charm intact, the surrounding Pitkin County restricts newly built homes to a maximum of 9,250 square feet. Welgos recently listed a property less than a mile from downtown Aspen with two parcels of land, each 36 acres, along with two smaller parcels of an acre each.
“One of the larger parcels has a beautiful 19,500-square-foot house on it and a six-acre lake, while the other has an entitlement that allows someone to build another house of that size, until it expires in 2028,” she says. “The property has guest and employee housing onsite, along with space for 45 cars, which is extremely valuable in Aspen, where there’s a shortage of both housing and parking."
In Aspen, Colorado, a vast 74-acre estate featuring a carefully designed residence and a private lake is on the market for US$300 million.
Aspen Snowmass Sotheby’s International Realty
Aspen, Colorado
While there are plenty of ski resorts around the world, few can match the year-round attraction of Aspen, says Mandy Welgos, global real estate advisor, Aspen Snowmass Sotheby’s International Realty.
“Some people come here in the summer only or in the winter to ski, while others like the shoulder seasons in spring and fall, when it’s quieter. What’s unusual about Aspen is that while we have all the natural beauty and outdoor mountain activities, we also have downtown, which is a mecca for art, music, high-end shopping and restaurants, alongside charm and history.”
“We never have much inventory, particularly high-caliber properties, but we always have demand,” Welgos says. “There’s a lot of competition for single-family homes and condos within walking or biking distance of downtown, but some people prefer larger estates for privacy in the mountains.”
To keep Aspen’s charm intact, the surrounding Pitkin County restricts newly built homes to a maximum of 9,250 square feet. Welgos recently listed a property less than a mile from downtown Aspen with two parcels of land, each 36 acres, along with two smaller parcels of an acre each.
“One of the larger parcels has a beautiful 19,500-square-foot house on it and a six-acre lake, while the other has an entitlement that allows someone to build another house of that size, until it expires in 2028,” she says. “The property has guest and employee housing onsite, along with space for 45 cars, which is extremely valuable in Aspen, where there’s a shortage of both housing and parking.
In Aspen, Colorado, a vast 74-acre estate featuring a carefully designed residence and a private lake is on the market for US$300 million.
Aspen Snowmass Sotheby’s International Realty
London, U.K.
The luxury housing market in central London is bucking the trend of volatility seen in some other markets, says Alex Isidro, managing director of United Kingdom Sotheby’s International Realty. “Transactions increased slightly, although values were down a little during the first half of 2025. Because prices are slightly weaker than normal, averaging about UK£7 million (US$9.4 million), domestic homebuyers have been our largest group of clients.”
Domestic homebuyers looking for residential neighborhoods are buying in Belgravia, Chelsea and Knightsbridge, while international property buyers are drawn to Mayfair. “Americans are the second-largest pool of homebuyers, although many of them decide to ‘try before they buy’ and rent for a while before purchasing property,” Isidro says. “Our other international buyers now are coming from India, Kuwait and Italy.”
A proposal to impose an additional tax on homes in the U.K. valued at more than UK£2 million (US$2.7 million) from 2028, as part of the government budget, could impact luxury market sales, the BBC reported in November 2025.21 Despite concern about tax laws driving international homeowners out of London, Isidro says the city is resilient. “We’ve seen some people leave, but others have seen it as an opportunity to move in. UHNWIs who own homes valued above UK£5 million (US$6.7 million) are holding onto their property or renting it rather than selling. People see London real estate as a stable asset that’s much less volatile than some other investments.”
The vast majority (92%) of homebuyers Isidro’s office dealt with during the first half of 2025 paid cash, which is a testament to the strength of the Sotheby’s International Realty brand and its clientele, he says. “Our market should remain as it is for the next few years, until we see another change in our government. In the meantime, we’ll likely start to see more international activity in London because people like the safety of investing here.”
Dubai, United Arab Emirates
The migration of wealth to the U.A.E. from the U.K. and Europe has led to record sales for both existing homes and yet-to-be-built luxury properties, according to Leigh Williamson, managing director, Dubai Sotheby’s International Realty.
“Inventory remains about the same in Dubai, and we still don’t have enough supply for the amount of demand from UHNWIs moving here for their permanent home,” Williamson says. “U.K. homebuyers are still number one for us, and with Europe going through changes, many love what Dubai has to offer. We also see people who live in the U.A.E. trading up, as business continues to grow here.” People from India, Pakistan, Saudi Arabia and Russia are also keen homebuyers, and now Canadians and Americans are showing up as well. While some are purely investing in property for the 5% to 8% return on investment, others are purchasing second homes and primary residences. “We’re seeing a rise in full-service buildings, like those we’ve seen in Hong Kong, China and New York City for years,” Williamson says.
“Branded residences continue to be the driving force for off-plan sales. Waterfront property has always been prime real estate in the U.A.E., along with golf-course living in a gated community. Some of the world’s top architects are coming up with incredible designs that are truly inspiring.”
She anticipates prices for resale assets to level off, especially some that have been overpriced. “Home sellers will have to adjust to the market when they’re looking for a sale, which makes it all the more important to speak with a qualified, experienced real estate agent who is going to be honest and transparent.”
Hong Kong, China
The luxury property market in Hong Kong continued its steady recovery in 2025 after the disruptions of recent years, says Woody Mah, managing director, List Sotheby’s International Realty, Hong Kong. The number of high-end transactions was up 8% to 10% during the first half of 2025, with prime locations such as The Peak, Mid-Levels and Repulse Bay recording price growth of 2% to 4%, he says.
“Much of this momentum is being driven by sustained low interest rates and the return of international homebuyers, particularly from mainland China and across Asia. There’s been a modest lift in inventory thanks to the completion and launch of several notable high-end projects over the past year. Even so, stock remains tight in top-tier districts such as Central and Tsim Sha Tsui in Kowloon, where demand consistently outpaces availability. This imbalance is keeping sustained upward pressure on values, especially in the ultraluxury bracket above HK$100 million (US$12.8 million), which continues to perform strongly.”
Hong Kong’s role as a major financial hub, combined with its enduring appeal to UHNW homebuyers, continues to support confidence in the real estate market, Mah says. Luxury homebuyers include mainland Chinese investors, local residents, long-term expatriates and UHNWIs from the mainland, many of whom have Hong Kong permanent residency.
The biggest change in 2025 was the government easing some of the toughest property-market cooling measures, such as removing extra stamp duties for non-local and second-home buyers, and relaxing mortgage rules. “For many homebuyers, that’s taken millions of dollars off the upfront cost and made financing high-value homes much easier,” Mah says. He sees an opportunity for the Sotheby’s International Realty global network to assist the increasing global mindset of affluent local homebuyers, as destinations like Japan, Thailand, Australia, New Zealand and the U.K. become especially attractive.
“ THERE’S BEEN A MODEST LIFT IN INVENTORY THANKS TO THE COMPLETION AND LAUNCH OF SEVERAL NOTABLE HIGH-END PROJECTS OVER THE PAST YEAR.
”
Woody Mah, managing director, List Sotheby’s International Realty, Hong Kong
Queenstown, New Zealand
In the Southern Lakes region of New Zealand, sales in the NZ$4 million (US$2.3 million) and higher luxury property market—and total sales volume—increased in 2025, says Clodagh Hall, chief operating officer, New Zealand Sotheby’s International Realty.
“Inventory levels are down, so our drive now is to get more listings,” Hall says. “We want to be ready—domestic demand and global geopolitical turmoil are driving homebuyers our way.”
New Zealand’s prime minister, Christopher Luxon, announced that foreign buyers can now purchase homes valued at NZ$5 million (US$2.9 million) and above, according to a September 2025 report by Mansion Global.22 Previously, they could only buy property if they invested at least NZ$10 million (US$5.8 million) in government-approved assets. Only overseas homebuyers from Australia and Singapore were exempt.
“This will reopen the doors to international homebuyers who are already looking at New Zealand and the region for property,” Hall says. “We’re seeing significant recovery in international visitor numbers, reaching around 87% of pre-pandemic levels. The majority of them are Australians.”
Hall also says the New Zealand Sotheby’s International Realty website is recording increasing numbers of international visits, particularly from the U.S., which indicates that the policy change will have a positive impact. “This is particularly relevant to us, as we are the only truly global real estate brand in the market and can open doors to vendors in a way no other company can.”
In the meantime, there has been a big increase in demand from local homebuyers for lock-and-leave holiday homes close to the Queenstown central business district and for rural properties with space, privacy and access to outdoor pursuits, because prices are still below their peak values.
Market transitions require global expertise
The Sotheby’s International Realty brand’s global network enables it to provide coordinated guidance across real estate markets, ensuring clients understand comparative value and opportunity, whether they’re considering domestic or international properties, White says. “Our affiliated agents’ expertise becomes particularly valuable during market transitions. For home sellers, we develop strategic pricing approaches by analyzing current market activity and homebuyer preferences. Properly priced luxury properties continue to attract strong interest.” For homebuyers, the Sotheby’s International Realty brand provides market insights to help them identify value and recognize opportunities.
Sales volumes in 2026 will likely depend on pricing discipline—accurately priced luxury real estate inventory should continue to move, while overpriced properties may stay on the market for longer. The biggest differentiator will be scarcity and location quality, with properties in supply-constrained markets maintaining their premium pricing power.
“While I don’t have a crystal ball, in June 2025 NAR projected home prices to grow by 4% in 2026, and the luxury real estate market has historically shown resilience during periods of broader uncertainty,” White says.23 “I expect luxury properties in premier locations to continue commanding premiums.”
Prices in California are among the highest in the U.S. This house in Newport Beach, California, is on the market for US$27.4 million
Pacific Sotheby’s International Realty
More from the report
Discover how these trends may impact your city.
© 2026 Sotheby’s International Realty. All Rights Reserved. Sotheby’s International Realty® is a registered trademark and used with permission. Each Sotheby’s International Realty office is independently owned and operated, except those operated by Sotheby’s International Realty, Inc. This material is based upon information which we consider reliable but because it has been supplied by third parties, we cannot represent that it is accurate or complete and it should not be relied upon as such. All offerings are subject to errors, omissions, changes including price or withdrawal without notice. If your property is listed with a real estate broker, please disregard. It is not our intention to solicit the offerings of other real estate brokers. We are happy to work with them and cooperate fully. Equal Housing Opportunity.
Do Not Sell My Personal Information | Privacy Policy | Terms of Use | Accessibility Statement