Things are not looking good for the New York's luxury property market. Recent reports say that the city is now lagging behind Vancouver, Sydney, Shanghai and other U.S. cities like San Francisco and Miami.
According to Knight Frank's annual Wealth Report, the values of luxury properties in New York recorded a measly 2.4 percent in 2015 compared to 18.8 percent a year earlier. This is way below Vancouver's 24.5 percent growth. Sydney, Australia saw a 14.8 percent increase while Shanghai grew by 14.1 percent, The Real Deal said.
Vancouver's market is especially hot these days. The metro just saw another record-breaking pace in terms of sales, with 36.3 percent increase in sales last February compared to the same period in 2015.
From last year's No. 1 spot, New York fell to No. 39 behind other U.S. cities. San Francisco, for instance, grew by 10.9 percent while Miami and Los Angeles saw 6.4 percent and 4.7 percent property values growth, respectively.
The latest Beige Book of the Federal Reserve reported that New York's luxury property market is looking "particularly sluggish" driven by increasing house prices and swelling inventory. Developers of high-end condos and apartments in the city are finding it hard to fill them up. Some even decided to cut prices way before the units go on sale, while others opted to divide units into two to make them more affordable.
"We thought it was too expensive for the market and where the market was," said Kevin Maloney, principal and founder at Property Markets Group. "The air is very thin up there in that buyer pool."
The slowdown in New York's luxury market is not expected to end soon, particularly with as much as 5,126 newly built units to be added on sale this year. The ongoing global economic volatility, oil price increases and financial market turmoil are also affecting foreign investors' appetite in injecting capital into the city.
