Share this article!

What a difference a year makes. 

At the beginning of 2022, real estate markets all over the world were up against huge demand, limited supply and high prices. Looking toward 2023, the landscape has changed dramatically since central banks began raising interest rates last spring.

Although home prices are falling and homes are lingering on the market, many in the industry look at the shift as more of a normalization than a correction. Sales activity and price growth from March 2020 to March 2022 was too hot not to cool down. 

The process has already started. Global house-price growth for luxury properties—the top 5% of the market—slowed to 8.8% per year in the third quarter, down from 10.9% at their peak in the start of 2022, according to a report from Knight Frank. But when accounting for inflation house prices are actually now declining by 0.3% year-on-year, the report said. 

In the U.S., markets are “coming back to Earth,” according to Jonathan Miller, president and CEO of the New York-based appraisal company Miller Samuel.

“Clearly the pivot of Fed policy has had an impact on every housing market in the country because rates were too low for too long,” Jonathan Miller, president and CEO of the appraisal company Miller Samuel. “It created this insatiable demand and obliterated supply.”

Sure, there are whispers of a recession. But Mr. Miller thinks it will be light compared to past periods of economic difficulty, largely because of the strong labor market. 

Other major cities are facing similar headwinds, including London and Sydney. But places that saw huge influxes of people come to town in recent years, such as Dubai and Miami, are likely to see little or no impact, experts say. 

Mansion Global talked to industry experts in seven luxury real estate hubs around the world to get their crystal ball predictions for 2023.

New York City

Following a record-setting year in 2021, sales activity in the city had already seen a significant slowdown by December—and that’s expected to last at least through the second quarter. 

“The first two quarters of 2022 were excellent, like superb. And then the third quarter started to slow down and now the fourth quarter has really slowed down,” said Bess Freedman, the CEO of Brown Harris Stevens, who noted that deals are down and demand has cooled. 

Looking to 2023, Ms. Freedman predicts continued turbulence for real estate as the Fed works to get inflation under control with continued rate raises. Fears of a recession—even a mild one—are also top of mind, despite the strength of the labor market, she added. 

“Real estate will be as it has been recently, which is a little bit rocky,” she explained. “It’s been ups and downs. There are still a lot of people spending a lot of money on expensive apartments—we just had somebody sign something for over $20 million. People are still closing and signing; they aren’t all walking away, but it’s slower. … It’s going to be a little challenging in the first quarter and maybe into the second, but I think we’ll rebound and start picking up again.”

However, the strong dollar continues to hinder international investment and Wall Street executives could see up to 30% cuts to bonuses compared to 2021, both obstacles to market growth, according to Mr. Miller. 

And although Manhattan has a high percentage of cash buyers, lower rates would benefit the borough, Mr. Miller said. New York buyers are also in tune with financial markets, which, of course, have been volatile because of Fed policy changes. 

“It creates a cautionary environment,” he said. “No one likes uncertainty and Manhattan is no different. We’re probably looking at a year closer to pre-pandemic, which was a little bit below average in terms of activity. … The 2023 story is going to be normalized, [and] certainly not a boom.”


South Florida has been one of the biggest beneficiaries of pandemic migration fueled by the ability to work remotely, low tax rates and the substantial stock market gains realized by many in 2020 and 2021. Demand has been so high that inventory is now extremely limited, keeping prices elevated. 

Take Miami Beach, where inventory has dropped more than 60% since the pandemic began, according to data from Mr. Miller, who is the author of market reports across the country for brokerage Douglas Elliman. Or consider Palm Beach, Florida, where inventory “has collapsed,” he said. 

“Miami—and I think it speaks to a large portion of Florida—was rebranded as a place to work during the pandemic,” Mr. Miller said. “The ability of remote work and greater mobility generally comes with higher compensation. So there’s been a restructuring of Miami real estate, not just because the significant excess supply has been obliterated, but because it’s providing a pro-business atmosphere that is pulling companies out of high-cost housing markets to Florida.”