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What do you think will happen to the global real estate market this year? Will the prices rise or fall across key regions in Europe, the United States, the Caribbean or perhaps the Middle East?

To answer these questions, a team of data analysts at JamesEdition have been developing a unique new benchmarking tool to assess the general attitude of investors in a given region; the Luxury Property Buyer Index, or LPBI is the first buyer sentiment indicator created specifically for the international luxury property market.

Inspired by the recent economic uncertainty, we chose to return and uncover the most reliable sources for intelligent insights: qualitative user generated sentiments, and quantitative results from our internal user behaviours. Below we will introduce the methodology behind LBPI modelling and display the first glimpse of what an LBPI forecast could look like.

What is the LPBI?

The LPBI automatically surveys* a selection of hundreds of high-intent browsers worldwide on JamesEdition during the beginning of each month with the objective of gathering their thoughts on property prices in locations where they are looking to buy. By aggregating the data and segmenting it per region, we are able to create a picture of how potential buyers believe that real estate prices will develop during the next six months globally. This type of index is usually a good indicator of actual price increases in the near term, and is usually correlated with coming changes in demand. We have seen similar indices before in several local markets, but we believe that the LPBI is the first of its kind to generate trends and predictions on a global scale.

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Tumultuous start of the year

The start of this year has been quite turbulent, to say the least. We saw continued growing demand for global luxury properties during the two first months of the year, but that quickly switched into a drop as COVID-19 started spreading and shelter in place was implemented in more and more countries. The southern European countries, like Spain and Italy, were hardest hit in March, while we saw demand drop only later in April in the US.

Strong growth in demand for primary and secondary homes or investments

However, as travel came to a halt and people started spending more time at home, traffic on JamesEdition’s Real Estate section experienced a sharp rise by 73% year-on-year. As the initial shock to the market wore off, demand also saw a rapid return and May ended as the highest month we have ever recorded for luxury real estate, with a 92% increase in buyer leads year-on-year. June and July later followed up with being just as strong.

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April – June Results: Europe on a fast-track to recovery, while the US is lagging behind

As we sum up the results for Q2 and step into Q3 2020, we can see that April-May most likely was the trough in a V-shaped recovery of buyer expectations for property prices. As many European countries have moved to quickly lift restrictions on movement, buyer sentiment has quickly shifted to more positive. In the US where restrictions have differed from state to state and as we still see a large amount of COVID-cases, sentiment was slower to pick up, but has nonetheless risen to European levels.

Other countries are a collection of non-European and non-US countries, with representation of the Caribbeans, Middle East, South-East Asia and Oceania. Many of these markets depend on an inflow of foreign investors, and we can see that price expectations continued to be dampened in a travel-restricted world.

We believe that the LPBI will be a great tool for agents and buyers to quickly and easily gain insights into the global luxury homes market. As the leading platform for the world’s best properties for sale, the JamesEdition team will continue to track this index monthly and add more data related to actual property price developments and demand.

* Potential buyers are asked whether they believe that home prices will rise, fall, or stay the same during the coming six months for specific locations (cities, regions, countries) where they are looking to buy. The index is calculated as {share of respondents that believe in rising property prices} – {share of respondents that believe in falling property prices}.

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