Strong Appeal For Luxury Property, Despite Interest-Rate Hil<es

As central banks continue to increase interestrates in an efort tostave of inflation. they've also created adrag in the overallhousing market, as homeowners face higher mortgage costs. For now. though, buyers arestilleagerto gettheir hands on a prime property-especially if they feel they're getting a deal.

"If it's priced in the right range, and it's a special property, it's still moving," says Chris Klug. broker and partner, Aspen Snowmass Sotheby's International Realty. Klug says tl,at more buyers onthe ultra-high-end had been taking out mortgages in the past couple ofyears because of "incredibly advantageous rates:· now he'sseeing more cash buyers, private financing, and porfolio financing.

"Thefear of missing out that was happeninglast yearis now replaced bythe fearof paying too much," says Michael Pallier, managing director, Sydney Sotheby's International Realty. "While the rates are going up. [buyers] mayfeel they don't have to rush because. in six months'time, prices might present a better value."

Higherinterest rates are indeed causinga bitof a "lock-in efect,''according toJim Egan. Morgan Stanley's U.S. housing strategist. On an episode of Bloomberg·s Odd Lots podcast, Egan explainedthat many would-be sellers are choosingnotto selland take on new mortgages. which could end up being two tothreepercentage points higher than theonesthey 1,ave now.As such, he said. he sees listings staying tight. protecting home prices frm falling.