The luxury real estate market is in good health and is thriving. However, activity is not the same in all corners of the world. While transactions involving luxury homes increased over the past year in Europe, the Caribbean and Asia, they fell by around 14% in North America. High interest rates and political instability in the United States may help explain these figures.
The latest analysis by Sotheby’s International Realty of the global luxury real estate market reveals that business performance varied widely by geographic region. Over the past 12 months, luxury home sales increased in the Caribbean (+25%), Asia (+18%) and Europe (+13%), but declined in Oceania (−20%) and North America (−14%), according to data from the Luxury Outlook 2026, now analysed by idealista/news. In the European market, Portugal stands out for showing strong dynamism in the luxury real estate segment.
But why did this happen? In Europe, interest rate cuts by the European Central Bank throughout the first half of 2025 had a “positive impact”, alongside stable inflation, the report notes. In North America, however, interest rates were considered “a greater concern” and had a “negative impact” on luxury real estate, despite the fact that the US Federal Reserve cut rates three times in 2025 and is now under pressure from Donald Trump to move forward with further cuts.
Demand, supply and sales of luxury homes worldwide
Change in market indicators over the past 12 months
Regions
Number of luxury buyers | Luxury stock | Luxury transactions
Africa / Middle East
29% | 14% | −14%
Asia
0% | 35% | 18%
Caribbean
58% | −8% | 25%
Europe
−8% | 21% | 13%
South / Latin America
−46% | 61% | −15%
North America
−33% | 61% | −14%
Oceania
20% | 13% | −20%
Chart: idealista/news
Source: Luxury Outlook 2026 by Sotheby’s International Realty
Created with Datawrapper
“Politics was also a significant factor in property purchase decisions,” with more than half of real estate agents in North America stating that domestic politics is harming the market, the report also notes. This view was shared by professionals in the Oceania region, for example. Meanwhile, those working in the premium real estate sector in Asia, the Caribbean, Africa and the Middle East are “more neutral or optimistic” about the impact of interest rates and politics on their markets.
Demand for luxury residential properties also “varied considerably across the world, with the greatest increase recorded in the Caribbean, followed by Africa/Middle East and Oceania, indicating the continuation of a seller’s market in these regions,” explains Sotheby’s International Realty. On the other hand, buyers are facing less competition in the markets of South and Latin America (−46%), North America (−33%) and Europe (−8%).
As for the supply of luxury housing, stock levels increased in almost all regions worldwide, particularly in North America (+61%) and South/Latin America (+61%), where, it should be noted, there was a sharp drop in demand. The Caribbean was the only region where a decline in the supply of premium properties was reported.
Luxury homes for sale
Freepik
Luxury home prices fall in most regions
The easing of demand pressure for luxury homes in Europe relative to supply led to a slight price correction in 2025, of around 2.2%. The same was felt in North America and South/Latin America, where “relatively modest” price reductions were recorded. “Oceania saw a larger decline [in luxury home prices], driven mainly by a 13.1% drop in New Zealand,” the report explains.
In Africa, the Middle East and Asia, however, luxury home prices grew at double-digit rates, with Japan standing out, where an increase of 21.4% was observed. In addition, “Dubai continues to demonstrate resilience and exceptional growth, with double-digit price appreciation driven by sustained demand for luxury and high-end properties,” says Leigh Borg, Managing Partner of Dubai Sotheby’s International Realty, quoted in the document.
Evolution of luxury property prices worldwide
Price evolution over the past 12 months and forecasts for the next 12 months
Price evolution last year | Expected price evolution
Africa / Middle East
43.0% | 7.9%
Asia
10.3% | 6.6%
Caribbean
7.2% | −1.4%
Europe
−2.2% | 1.3%
South / Latin America
−1.5% | 1.6%
North America
−2.0% | −1.6%
Oceania
−5.7% | 5.7%
Chart: idealista/news
Source: Luxury Outlook 2026 by Sotheby’s International Realty
Created with Datawrapper
This luxury real estate market in the United Arab Emirates “has evolved beyond short-term speculation. Today, buyers are long-term investors who see Dubai as a global city of stability, sophistication and growing opportunities. As stock diminishes and new launches become more selective, we expect luxury properties to maintain their upward trajectory through 2026,” adds Leigh Borg.
Forecasts for luxury real estate price trends through mid-2026 are relatively optimistic. Industry professionals expect price increases in Oceania (+5.7%), South/Latin America (+1.6%) and Europe (+1.3%). In Asia, prices are projected to continue rising, but at a slower pace than in 2025. In the Caribbean and North America, a small decline in luxury home prices is expected.