Mainstream house prices in the United States are now 9.3 per cent higher than a year ago and new home sales are at their highest level for five years with lack of supply fuelling growth and recovery, Propertywire.com reported.
The growth is being led by demand in the luxury property market sector with international buyers snapping up properties, according to a new analysis from international property firm Knight Frank.
A lack of supply as a result of tight credit conditions has been the main driver of luxury price growth so far this year, the analysis says. For example, the number of apartments for sale in Manhattan is currently at a 12 year low.
International buyers account for around a third of sales above $3m in the New York market but closer to 50 per cent in its equivalent new homes market.
The median price of luxury condos in New York rose by 8.2 per cent in the first half of 2013.
Miami continues to record strong price growth, attracting demand from New York professionals as well as South American and European investors and the Hamptons, always a popular location with wealthy buyers, has seen the highest number of second quarter sales since 2006.
The report points out that in New York and Miami, following the artificial spike in activity created by the fiscal cliff at the end of 2012, most analysts predicted a slowdown in 2013, particularly at the top end of the market, but were proved wrong.
The median price of luxury condominiums in New York rose by 8.2 per cent in the year to June, and by 5.9 per cent in Miami. Co-operatives, by comparison, recorded little change in price due in part to the restrictions placed on international buyers by most co-operative boards.
The report read in parts, “The key price determinant in 2013 has been supply, or the lack of it, brought about by tight credit conditions.
The number of apartments for sale in Manhattan is currently at a 12 year low. Unable to secure finance, potential vendors are staying put, limiting the turnover of homes in all but the new homes market.
“The house building pipeline was effectively turned off in 2007 and both Manhattan and Miami sold only a shadow inventory up until 2012 when new projects began to complete. With the development cycle lasting approximately two years we are only now starting to see these projects enter the market.
“Absorption levels are high, particularly in New York, even at prices of $4,000 per square foot and above. New York’s inventory has not fallen because demand has strengthened significantly, supply has been falling for three years yet sales have only picked up recently. Instead, homeowners are biding their time.”
The starting price of the majority of new developments in Manhattan is now around $3m.