While the $10 million plus residential market is outperforming, wealthy purchasers have options when it comes to borrowing.

Residential sales in many of the world’s mainstream markets are down by 20% to 30% year-on-year due to the surge in finance costs.

While not immune from slowing activity, Knight Frank’s latest data confirms that global super-prime ($10 million plus) markets have been more resilient, with sales across 12 key markets falling only 2.4% in Q3 this year against the same period in 2022 – with 362 sales set against 371 respectively.

Annualised data shows a similar picture with sales in the 12-months to September down by 4.1% compared to the full year 2022 results.

The super-prime market is driven more than most by new-build completions. Those strong sales volumes in 2021 were flattered to an extent by delayed completions from 2020, and to be fair some of the current strength in our global number, especially in London, New York and Miami have been bolstered by completions in luxury schemes which started pre-pandemic. As we move into 2024 the tailwind from new build sales will weaken as the lower volume of new project starts through the pandemic begins to be felt.

Mortgages from private banks tend to be 1% or 2% over the base rate or Sonia swap rate, and though appetite for debt has eased as interest rates have risen, many clients remain keen to borrow in order to reallocate funds elsewhere and optimise their portfolios for tax purposes. Appetite for debt among wealthy borrowers is likely to rise as the year progresses and interest rates fall, but volumes are often driven by the prospect of attractive returns elsewhere.

Stocks, for example, look overvalued by some metrics, but forecasters including Morgan Stanley expect gains to accelerate during the second half of the year.

The fractious geopolitical landscape is likely to draw more purchases to safe haven markets, including London. Prime real estate offers wealthy individuals an opportunity to gain exposure to sterling, while borrowing against the property enables overseas purchasers to limit their exposure.

If you are thinking about borrowing to finance a property purchase or to remortgage and would like to discuss the options available to you, get in touch by emailing mortgages@knightfrankfinance.com. We have access to over 200 lenders, and can help find the right mortgage for you.