Luxury housing enters the year marked by more selective buying and rising wealth creation. According to experts, by 2026, the premium residential market will be defined by more than the pursuit of prime locations or extravagant amenities. The highest-value transactions will be driven by highly selective demand, influenced by international capital flows and political shifts, with movements ranging from California to the United Arab Emirates.
What has changed over the past year is market momentum. After the peak of the pandemic, luxury housing saw a strong boom, with demand between 2021 and 2023 pushing prices sharply higher worldwide. Over the past year, this surge has stabilised. Buyers remain active but are more discerning, and broad price hikes have given way to more moderate growth across many markets.
Global growth in luxury residential prices stabilised in 2025, according to Knight Frank’s Prime Residential Index, as buyers pushed back against sharply rising prices.
Even so, development and investment in high-end properties continue to gain momentum, channelling capital into the real estate sector. Savills World Research reports that global real estate investment reached around $633 billion in the third quarter, up 10% year on year.
“After a turbulent few years, global real estate capital markets have shown clear signs of recovery throughout 2025,” said Charlotte Rushton, a research analyst at Savills World Research.
Even so, the recovery remains uneven, shaped by local market conditions. In Dubai, for example, years of rapid price growth appear to be easing, including at the top end of the market. In London, prolonged political uncertainty dampened activity for much of last year before demand picked up towards year-end.
Elsewhere, limited supply, ongoing wealth creation and shifting buyer priorities are reshaping pricing power.
Looking ahead to 2026, the luxury housing market is set to enter a more demanding phase. Against this backdrop, experts at Mansion Global outline six key trends for high-net-worth buyers to consider as they plan for the year ahead.
The "affordability" factor in luxury housing
The long-debated issue of housing affordability is no longer confined to the mainstream property market. In the luxury sector, the key question has shifted to how much buyers are willing to pay.
In the United States, for instance, rising construction costs are weighing on prime markets such as Los Angeles. Labour shortages linked to Trump-era anti-immigration policies, higher material costs and rebuilding efforts following last January’s wildfires are all pushing prices higher. Billy Rose, co-founder and vice-president of estate agency The Agency, says upward pressure on prices in California is set to continue.
“I believe prices are set to rise significantly over the next 12 to 24 months. Demand has increased overall since the fires, and as displaced homeowners receive insurance payouts and return to the market, we expect a surge in demand that could further tighten conditions.”
In Dubai, meanwhile, prices have soared in recent years, stretching even the wealthiest buyers. Several luxury villa communities have quadrupled in value over the past five years, according to ValuStrat.
“We are approaching the final phase of the cycle,” says Haider Tuaima, managing director and head of real estate research at ValuStrat, a leading international consultancy. Annual price growth in Dubai’s luxury residential market, which previously stood at around 38%, has slowed to close to 20%, with further moderation expected in 2026. “2026 will be positive,” Tuaima adds, “but not as strong as the past four or five years.”
In London, pressure around “affordability in luxury” is more subdued, but buyer sensitivity has increased after years of fiscal and tax uncertainty. Frances McDonald, head of residential research at Savills, notes that prices in central London remain around 25% below their 2014 peak.
“We don’t expect significant price falls, but we do anticipate a degree of price sensitivity, with some buyers continuing to act more cautiously,” she adds.
Wealth creation is expanding
Trends in luxury property markets remain closely tied to wealth creation – or the lack of it – particularly in locations with strong exposure to equities, private equity and technology-led growth.
“The strength of the stock market is likely to continue as AI-driven productivity boosts corporate earnings,” says Mike Fabbri, a luxury property broker at Agency RE in New York. “When equities rise, buyer confidence in the luxury sector tends to follow.”
The Knight Frank Luxury Housing Index shows that cities linked to financial and technological wealth have recorded some of the strongest gains worldwide. “Wealth is accelerating overall, and that has a direct impact on prime residential markets,” says Kelcie Sellers, associate director at Savills World Research.
Meanwhile, the UBS Global Wealth Report forecasts that around 30% of global wealth will soon be concentrated in economies traditionally classed as "emerging". UBS estimates that about 680,000 new US-dollar millionaires were created worldwide last year alone, with a further one million expected before the end of the decade.
Interest rates matter, but not everywhere
Lower interest rates are expected to support property transactions through to 2026. While the impact is greatest outside the luxury segment, it is helping to lift overall borrowing.
Lower debt costs and stabilising equity values have made leverage a return driver once again, with borrowing increasingly enhancing investment returns rather than eroding them, experts say.
In the United States, this effect is likely to be most pronounced just below the very top end of the market. A Luxury Report by The Agency, citing Fannie Mae forecasts, suggests mortgage rates could fall below 6% by the end of 2026, potentially releasing pent-up demand in high-cost markets such as New York and Los Angeles.
Although buyers of premium homes are less reliant on financing, higher rates and ongoing macroeconomic volatility continue to foster caution, even as transactions move forward, the report notes.
Political clarity defines where the rich buy homes
Political certainty is once again a major factor shaping where wealthy buyers choose to live and invest.
In London, ongoing speculation over tax changes suppressed premium home purchases for much of 2025. Savills reports that transactions above $1 million fell by around 20% year-on-year in November, as buyers waited for clarity.
Following the government’s fiscal and spending announcement at the end of November, activity has begun to recover. “We could see a two-stage return of demand,” notes the consultancy: an initial release of cautious buyers, followed by a more sustained rebound as uncertainty fades.
Elsewhere in Europe, political clarity has benefited certain markets. Milan, for example, continues to attract strong international interest thanks to Italy’s flat-rate tax scheme for new residents. Eligible newcomers pay a fixed €200,000 annual tax on foreign-sourced income, providing exceptional fiscal certainty for high-net-worth buyers seeking to relocate.
Supply constraints remain structural
In international luxury markets, the limited supply of properties meeting buyers’ exacting standards continues to push prices higher.
“The luxury market remains constrained by an imbalance between supply and demand,” Savills notes. “In many cities, demand still far outstrips the availability of prime properties.”
In New York, these supply constraints are structural rather than cyclical. In Miami, domestic migration within the United States has intensified pressure on the high-end segment, while new developments struggle to keep pace. Across the Atlantic in London, planning restrictions limiting the size of new projects have created a shortage of larger, newly built properties.
The next generation is rethinking ownership
As wealth shifts to younger generations, attitudes towards luxury property ownership are evolving. Liam Bailey of Knight Frank notes a growing reluctance among affluent young buyers to maintain large property portfolios.
“Many wealthy families may own two, three, or four homes,” he says. “Will the next generation want to continue this, or will it clash with their lifestyle?”
Younger high-net-worth households increasingly favour fewer properties – homes that serve as long-term residences, are well-connected, climate-resilient and easy to manage – over luxury complexes requiring constant oversight.
“Buyers at this level prioritise sustainability, technology access and amenities that enhance daily life,” adds Mike Fabbri of Agency RE. “With global wealth continuing to flow into New York, properties offering long-term value and an improved lifestyle will see the highest demand.”