Property price is expected to increase 2% this yearHefty hikes in interest rates, soaring inflation rates, and a risk of a recession are looming over the US.
However, these soaring economic headwinds and intensifying geopolitical uncertainty have actually favoured the prime property market in New York City.
2023 is expected to witness an increase of 2% in the luxury property price in New York, reported Realty+.
NYC’s Luxury Property Market is on Firm Ground
In 2022, more than 14,500 properties were transacted in Manhattan—a jump of 23% from the pre-pandemic levels of 2019.
As a whole, the city racked up 244 home sales worth $10 million or above—higher than any other city in the world.
What’s Driving the Hike in Property Prices
Supply constraints compared to demand, safe-haven capital flight, and wealth preservation are the key factors contributing to driving prime property price growth. On top of that, the post-pandemic surge in prices continues to push property prices higher.
The cash buyers accounting for roughly 80% of home transactions have made Manhattan luxury home sales defy the USA rate hikes.
Luxury homes in New York reported an average growth of 2.7% in 2022.
In March 2023, the Federal Reserve declared another 25 basis point interest rate, increasing the federal funds rate from roughly zero in March last year to a range of 4.75% to 5%. This benchmark rate is the highest it’s been since 2007. It’s the ninth consecutive time the Fed has increased the rate as part of its effort to discourage inflation.
However, analysts predict the Fed to cease hiking rates in response to recent bank collapses in the USA (e.g. Silicon Valley Bank).
Even though the average rate for a 30-year fixed mortgage, the most popular home-loan product, has plummeted to 7.08% this March from its peak at 7.32% in November 2022, it’s still considered high compared to historic levels. Highly leveraged homeowners are staying put instead of facing a double whammy from mortgage costs, which can result in decreased inventory levels.
Again, the rental market in the city has started to fall into place as it is fast recovering from the COVID-19 crisis.
The rental value for luxury properties rose by 19% in 2022 alone. Since 2021, it soared to 49%.
The rapid increase in property demand in Manhattan has shrunk the number of available rental properties from 41,516 in October 2020 to 14,148 in January 2023.
With mortgage rates continuing to inflate and rental stock shrinking, tenants are locking in, and opting for longer leases.
The number of leases in New York has surged as rents have notched last year’s record.
The number of new lease signings in January 2023 increased by more than 42%, which was only around 16% in February 2021.
The median rent in Central Park South landed at $10,995 which is the highest in the city. The exclusive enclaves of Tribeca and Soho ranked second and third with median rents of $9,500/month and $6,395/month respectively.
Against volatility in multiple asset classes and intensifying economic tension across the country, New York’s increasing rents, persistent price growth, and low buying costs are luring investors seeking an inflation hedge in a global and transparent market.
On top of that, the strength of the dollar has led to more interest in luxury New York properties among ultra-rich buyers.
With wealthy buyers investing in upscale properties in the city to maximise their property portfolio, the demand for luxury property management services like The London Management Company is skyrocketing. A high-end property management service ensures a client’s property is always well-managed and ready for their arrival.
Wrapping Up
New York exhibits a non-linear relationship between price and size: with more deals transacted at higher prices, the expansion of luxury property lifts the entire property market.
Media Contact
Company Name: Geeky News
Contact Person: Press Officer
Email: Send Email
Phone: +44 (0)203 800 1212
Address:Parallel House, 32 London Road
City: Guildford
State: Surrey
Country: United Kingdom
Website: https://www.geekynews.co.uk/
