Luxury Home Market Hot Around the World

NEW YORK — While the post-crash luxury housing market is booming on almost every continent, first-time home buyers are having to settle for something smaller, to look farther afield or resign themselves to rented apartments.

In Asia, Africa and Latin America--and even in the Soviet Union, where home ownership is rare--the trend is toward the suburbs or out of the city completely.

By contrast, in Western Europe there is a revival in inner-city housing, with “gentrification”--renovation of rundown houses in once-unfashionable areas--an increasingly attractive proposition.

Foreign buyers have become intensely active in blue chip neighborhoods of numerous major cities since the October stock market crash, especially the Japanese whose strong yen and sky-high prices at home make overseas property seem cheap.

With luxury apartments of just 750 square feet fetching more than $8 million in Tokyo, France has become a favorite bargain-basement target for Japanese buyers.

“Since the crash, Japanese buyers have flooded the property market, buying into the top end of the range and acquiring huge tracts of land,” said a French real estate agent.

West Germany told a similar story, with Japanese eagerly bidding for mansions and castles.

In Hawaii, Honolulu Mayor Frank Fasi has called for heavy taxes to curb Japanese speculation, which he said caused a 32.3% surge in land prices on the island of Oahu last year.

Home Prices Rise 60.2%

“In one section of our island where most of the action has been, the average price of a single-family home went from $297,000 in 1986 to $475,000 last year, an increase of 60.2%,” he said.

New York is another target, not only for Japanese but for Britons, Latin Americans, Taiwanese and Filipinos, according to Melissa Cohn, chairman of Manhattan Mortgage Co.

“For the first two weeks after the crash, everything came to a screeching halt,” said James Stewart, an agent for several of New York’s newer buildings. “But from November 1, things went back to where they were. Sales have been very good.”

He said prices for apartments in one of his buildings had been raised four times since the crash.

Kenya has also seen the price of top-scale properties pushed up by foreign buyers, mostly Indians, Africans and Europeans. Mansions in Nairobi’s elite suburb of Muthaiga go for up to $800,000, according to local real estate agents.

In Sydney, the financial hub of Australia, mansions have been selling for up to $20 million, but, despite fears of an influx of buyers from Japan and Hong Kong, most of the purchasers have been Australians.

Britain, with its resurgent economy, had a similar story.

“There are lots more British purchasers looking for property at the top end of the market,” said Trevor Kent, president of the National Assn. of Estate Agents. “And these days half of them are arriving in their own helicopters.”

In Poland, where foreign property ownership is banned, many of the most expensive homes are bought by Poles who worked for several years in the West and came back with a small fortune.

In contrast, the boom in the luxury market seems to have passed Latin America, where many countries are suffering from economic crises. In Mexico, the fine mansions remain in the same family for many generations and are rarely sold, while in Buenos Aires there has been little interest in luxury homes and apartments costing $300,000 and more.

No Effect in Los Angeles

On the U.S. West Coast, Art Aston, executive vice president of the Los Angeles Board of Realtors, said the crash had no effect on the top end of the market because it was dominated by “people who can buy whatever they want.”

However, Aston said increasing prices were “taking more and more first-time buyers out of the marketplace.”

Some families settle for smaller housing to afford the cost of staying in the city, and this is widespread in numerous countries. Others move to the suburbs.

In Toronto, where a severe housing shortage has pushed the price of an average home up 23% since last year, real estate agents said first-time buyers were having to look in communities 30 miles away.

Tokyo’s awesome housing costs are also forcing workers to live farther and farther from the capital, and increasing numbers of workers are spending four hours and more a day commuting on trains.

The pattern is repeated in the United States, Australia, France, Britain and many West European countries. However, in other countries the move to the suburbs--or out of the city entirely--is a matter of choice.

In Mexico City, many people quit city living to escape the notorious smog, traffic and crime. In Buenos Aires, where town and suburban costs are about the same, elderly people and young families prefer the open spaces of the suburbs.

In Nairobi, Rabat and Casablanca, the exclusive neighborhoods are all in the suburbs.

Soviets Dream of Dachas

A dream of many Soviet citizens is to own a dacha, or summer cottage, in the country, but only a few manage to achieve it. The demand is so great that the price of a three-to-four room dacha with no hot water or indoor toilet has tripled in the last five years to $50,000.

In several West European and U.S. cities, the trend has been back into the city, renovating once-fine houses in rundown districts. This has been the case for years in London, most recently in Brixton, formerly notorious for its race riots.

In West Germany, more people are moving into inner-city areas, revitalized by rebuilding and renovation, to take advantage of the amenities.