The luxury home market is affected by some unique factors in addition to the conventional factors influencing the real estate industry. Here are some of the things that affect the luxury property market:
An Influx of Foreigners
An increase in property prices usually follows an influx of foreigners. This is especially true with high net worth foreigners who can afford to invest in foreign countries, especially those who are seeking to buy vacation home, second home or an investment home. Some foreigners are willing to pay top dollar for luxury properties, and this ends up driving up prices for all luxury prices in the area.
Changes in Laws and Regulations of Foreign Home Ownership Market
Changes in the laws and regulations of the property market may also affect the prices of luxury properties in the area. This is especially true with changes that affect expensive properties or those that touch on foreign property ownership. For example, when the local rules and regulations are relaxed to attract foreign investment, the property prices may witness a slight upward change as a result of increased interest in the area.
An Increase in Desirability of the Area
When a famous or popular family buys a luxury property in an area, the area may suddenly become more desirable to other people, driving up property prices. For example, when the CEO of a fortune 500 company, the vice president or a famous celebrity (think a popular musician or actress/actor) buys a luxury apartment in the area; the area may become more desirable in the eyes of other people, driving up the prices of neighboring properties.
Lastly, political uncertainty is another factor that can affect both the local and national luxury home market. For one reason, a good chunk of luxury home buyers comprises foreigners as previously mentioned. Such buyers may temporarily cool their market activities during elections, especially polarizing elections. Apart from that, the welcoming nature of the locals and changes in property ownership laws are also some of the things that may. In most cases, politically-instigated market variations only last for a short while; they rarely affect things in the long run.
As you can see, the luxury home market is rarely a stagnant one; at any one time, there is something going on that can affect property prices. Luckily, your real estate agent knows about all these market changes and will be on hand to help you get the best deal when buying a luxury home.