Is 2016 the right time to sell property in New York? Before we discuss the New York investment property market trends in 2016, let’s just look back at 2015 a bit. 2015 saw rents in Manhattan and Brooklyn rise to a record high level. The luxury apartment market witnessed a slowdown and the competition for homes in Upper Manhattan was higher than ever before.
What’s in store for the New York property market in 2016? Let’s find out!
Slower Growth in 2016
Experts are of the opinion that the property market in 2016 will witness a slower growth than what was experienced in 2015. 2015 saw residential property prices grow by 5.7 percent. In 2016, there will be a cooling down of the housing market in New York and the growth rate is expected to be not more than 2.2 percent. The rental market is expected to slow down as well, but not so much as rents are expected to grow by 3.7 percent. These numbers have been arrived at by experts after having analysed real estate trends and data in New York for the past 5 years.
A Slowing Down of the Manhattan Luxury Market
The Manhattan luxury market faces a glut of properties for sale in 2016 because of new developments from 2014. Back in 2014 when there was a construction boom in Manhattan, experts were of the opinion that the luxury market in Manhattan would experience double digit growths in the foreseeable future. That hasn’t happened as the demand has slowed down considerably in the Manhattan area. In fact prices here peaked back in February 2015, and since then we have had a slow decline in property prices in Manhattan’s luxury apartment market. But this is generally a good thing because things were getting out of hand. A slight correction was the need of the hour to prevent a real estate bubble from taking shape.
Millennials are expected to turn buyers for the first time
New York City is dominated by Millennials or those who are 30 years old or younger. Millennials in New York are serial renters – you’re unlikely to find anyone young in New York who has an apartment of their own. Most live in rented apartments, which is one reason why rents are so high in New York. This is expected to change this year as a lot of Millennials are expected to grow up into first-time apartment buyers. This is a welcome development and could control the inflation in the rental market a bit.
A lot of interest will come from China
China’s economy hasn’t been doing very well and the recent stock market crash has made many wealthy Chinese to remove their money from stocks and look to invest in properties abroad. New York has always held a great fascination for the rich and loaded of China and we expect to see a lot of money coming into New York from China in 2016. The Chinese are already among the most enthusiastic buyers of luxury apartments in Manhattan and elsewhere in New York, we will see more of this in 2016. In fact, 25% of the overseas investment in New York in 2016 is expected to come from China.
Fed rate hike and its impact
The Fed’s rate hike was only to be expected and hasn’t surprised any of the serious players in the New York property market. The higher cost of mortgages because of the rate hike shouldn’t be a problem in strong economic conditions such as the one in the United States right now. High mortgages are a problem only when the economy performs poorly. So the New York property market should be unaffected by the Fed rate hike and things should be just as usual.