Luxury real estate favored as hedge against inflation, says study

The privileged status of luxury real estate as a practical hard asset that offers a hedge against inflation from both first and second home buyers and investors, according to a recent report Christie’s International Real Estate.

According to the 2022 Mid-Year Luxury Trends Report, the strong luxury real estate market of the past two years will continue for the remainder of 2022 and well into 2023, despite high inflation, rising interest rates and a stock market that has posted double-digit losses.

The report includes interviews and insights from 20 independent Christie’s International Real Estate subsidiaries from continental North America, the Caribbean, Europe, the Middle East and Southeast Asia, as well as Christie’s International Real Estate Co-CEOs Thad Wong and Mike Golden.

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In addition to investing in luxury homes as a hedge against inflation, the report identifies two other key trends driving luxury home for sale markets around the world:

  • The expected strength of Blue chip luxury marketsas wealthy buyers look beyond down cycles
  • Searching for the relative value of luxury homes after two years of epic price increases.

Indeed, high inflation, a roller-coaster stock market and a slowdown in luxury real estate, which has already begun in some regions, could motivate high net worth individuals to venture back into the real estate market in search of opportunistic purchases, notes Thad Wong, Co -CEO of Christie’s International Real Estate.

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“Whether affluent buyers are looking for value in some locations or paying a premium in others, the overall market will move toward the high end over the next few years, as typically happens in a volatile economic climate,” Wong said.

This trend puts – or rather – the focus on a handful of blue-chip real estate markets around the world, where buying activity does not always correspond to the current economy, but rather to the personal desires and long-term goals of people who can afford these and wait for the next cycle.

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“The strength of luxury real estate around the world in the first half of 2022 surprised many observers. But across our network – certainly not in every market, but in many – brokers are forecasting a strong year-end with momentum carrying over into the next year,” said Thad Wong, co-CEO of Christie’s International Real Estate. “The motivations of luxury buyers vary by location and situation, but overall we expect the market to move toward the high-end over the next few years, as is typically the case in a more volatile economic climate.”

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