1) With zero or negative interest rates, many buyers consider Manhattan real estate to be like a secure savings account that will keep its value. When faced with the choice of a guaranteed loss in a bank, or real estate that holds real value and is expected to appreciate over time, buyers may continue to bid up Manhattan real estate prices.
2) According to CBRE research, the average price of property in New York sold for $842 per sq. ft. compared to London at $1,025 per sq. ft. and Hong Kong at $1,416 per sq. ft. This means that New York prices could continue to rise another 21 to 68 percent in order to reach the same relative price levels.
3) The US is considered a safe haven compared to other geographic regions. Wealthy buyers from Russia, China, India and other parts of the emerging world perceive New York a stable market to invest. The US economy still remains one of the strongest in the world, and hasn’t suffered the same decline as commodity producing emerging countries. The US dollar has been strong and it’s considered a politically stable place for foreigners to put money.
4) New York Manhattan real estate is much more affordable than other global cities when comparing average income to average prices. New York is 2.8 times more affordable than London, and 6.4 times more affordable than Mumbai.
5) Renters may choose to lock in their cost of living in fear of being priced out of the market. If prices continue to rise, or interest rates rise, renters may decide the pull the trigger in a purchase before they lose the opportunity. While prices are higher than they were in the past, at least they will have locked in their price. Many tenants are seeing their rent go up faster than property prices so it could make sense to lock in a long-term cost for living in New York.
6) Many affluent and wealthy millennials will inherit or be gifted the funds to purchase their homes. Their parents may be financially successful and want to give their children a leg up. In many cases parents or grandparents can gift, guarantee or co-sign a purchase to help them acquire a home which they can live in and launch a career. New York has many great professional opportunities and world-class living. Many families consider it well worth the cost of buying an apartment to provide the very best opportunities for their children that could last them a lifetime.