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Why we’re working anywhere but the office

For many, working from home is the new normal. The transition from being based in the office to working off-site has been a fundamental one, and almost four in 10 Australians worked from home at least once a week throughout 2023.

While figures show a slight decrease on 2021, working from home (WFH, it even has its own acronym) has continued to escalate in white-collar occupations, with 60 percent of managers and professionals eschewing the traditional office set-up. And those who aren’t already doing it wish they were. According to the annual Taking the Pulse of the Nation report, almost all workers (94pc) would like to do at least part of their work hours at home.

“I would say that the days of only full-time in the office for all employees are likely gone for good,” says the author of the report, the Melbourne Institute’s Professor Ragan Petrie.

“The trends in Australia mimic those in other countries where hybrid schedules are quite common.”

But is it all good news? Among the many compelling reasons to ditch the commute — saving time, improved mental health, higher productivity and being able to put the washing on — there are the well-documented shortcomings regarding the isolation, and missing out on the opportunities that those casual catch ups in the stairwell can offer.

Opportunities for casual connections for in-office workers are not enough to entice many. Image: Shutterstock

“Constant drop-bys for chit-chat are not productive, but purposeful conversations are,” counters Petrie. “There might not be shortcomings of working from home per se, but rather not having the right infrastructure and support in place for workers to be productive. It’s important for employers and workers to figure this out.”

For those who are new to the workforce, flexible working arrangements are just the way things are. According to one survey, two out of every three Generation Z workers believe that the option to work from home is a non-negotiable.

Underpinning the normality of remote work are the advancements in automation and technology that make the transition smoother than ever — and perhaps support the use of email and text over the meetings and phone calls that younger generations shy away from.

“People of different ages have differential experience with technology, and there are some ways of communication people may feel more comfortable with than others,” says Petrie. “Certainly, technology plays a large role. Those whose jobs allow them to tap into technology to perform their tasks are well poised to be successful with a hybrid schedule.

“In the end, if worker output is satisfactory, why is it important where it is done?”

At the start of the pandemic as office-goers scrambled for a space to call work, the kitchen table was the go-to location. Now working remotely has become a more permanent arrangement, a purpose-designed study area or hybrid space is as desirable in real estate brochures as a media room or butler’s pantry.

Roger Wardy is a director at Ray White Touma Group in inner city Sydney, where more than 100,000 office employees have left the CBD for the greener pastures of remote work arrangements.

“Most house hunters want to see a home office or office space these days, and in larger homes it’s an expectation,” he says.

“As such, we’d be more likely to market a six-bed home as a five-bed plus office. If a buyer works from home, that will definitely add value.”

But the home office is just the beginning. Having paved the way for more flexible work arrangements, there’s now a growing trend towards co-working environments for companionship, productivity and a delineation of work and home.

High-tech co-working spaces offer several advantages over working from home, making them the preferred choice for many. A professional environment means distractions are minimised, and you’ll have access to state-of-the-art amenities that you probably won’t have at home. And then there are those networking opportunities — co-working spaces attract a diverse group of professionals and who knows what you might find out at the communal coffee bar? It’s something that’s making its way up the agenda for apartment developers, too, with those on the front foot offering co-working spaces along with the pool, gym and rooftop entertaining.

At the luxury new development Paradiso Place in Surfers Paradise (pictured above), the entire 2900sqm 26th floor is dedicated to a state-of-the-art co-working space, maximising 360-degree views of the Gold Coast from the ocean to the hinterland.

“To have the option of working in a space like this with all the facilities of a high-tech office within your own apartment building is an exciting prospect for buyers,” says Total Property Group Managing Director Adrian Parsons. “We have been receiving a great deal of interest in this development from business owners, entrepreneurs and professionals who can see themselves waking up in their luxury apartment with ocean views to go for a walk or run along the beach, use the onsite gym, then conveniently head to work in a state-of-the-art co-working space within their own building.”

The space incorporates a boardroom, private meeting rooms, work pods and multiple hot desks. And it’s not all about focused work; there’s also a spacious balcony event space and a Coffee Emporium complete with baristas.

“With working from home becoming the new normal, we are seeing many Australians choosing to move to quality lifestyle locations like the Gold Coast, and a full-floor co-working space of this standard is attracting a high level of inquiry,” says Parsons.

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Fed Cuts Rates Again, This Time by a Quarter Point

US: The Federal Reserve approved a quarter-point interest-rate cut Thursday, the latest step to prevent large rate increases of the prior 2½ years from weakening the labour market as inflation eases.

The decision, coming the same week as the election of Donald Trump to a second presidential term, followed an initial cut of a half-point in September and will bring the benchmark federal-funds rate to a range between 4.5% and 4.75%. All 12 Fed voters backed the cut.

Officials have said those moves are warranted because they are more confident that inflation will return to the central bank’s target and because they believe rates are still high enough, even with the latest cuts, to dampen economic activity.

The move was expected. Stocks and Treasury yields were steady after the announcement.

“We are committed to maintaining our economy’s strength,” Fed Chair Jerome Powell said at a news conference. He said officials are confident that with an “appropriate recalibration of our policy stance,” inflation can continue heading lower with a solid economy.

Trump’s election victory this week has the potential to reshape the economic outlook, with presumed GOP majorities on both sides of Capitol Hill enabling a broad shift on taxes, spending, immigration and trade. Economists are divided over whether the mix of policies will boost or weaken growth and drive up prices.

The shift in the outlook, in turn, has fuelled questions on Wall Street over whether the Fed will alter its earlier expectation that rates could be steadily dialled lower over the coming year or two.

Powell said it was too soon to say how the next administration’s policies would reshape the economic outlook.

“We don’t guess, we don’t speculate, we don’t assume” what policies will get put into place, Powell said. “In the near term, the election will have no effects on our policy decisions.”

Powell also said he had no intention of leaving the Fed before his four-year term as chair expires in May 2026. “Not permitted under the law,” Powell said when asked if he believed the president could remove him or other Fed personnel from their positions before their term expires.

Since the Fed cut rates in September, longer-dated bond yields have climbed notably, meaning the cost to borrow for a mortgage or car loan has gone up. Yields have increased in large part because better economic data has led investors to reduce their worries about a recession, which could have triggered larger rate cuts.

But some analysts think the bond-market selloff may also reflect concerns by some investors about higher deficits or inflation in a second Trump administration.

Either way, the market has generated an unusual result: Borrowing costs rose after the Fed cut rates. The average 30-year mortgage rate has jumped since mid-September, to 6.8% this week from 6.1%, according to Freddie Mac.

Over a similar time frame, investors in interest-rate futures markets have steadily reduced their expectations over how much the Fed will cut rates over the next year or so. They now see the Fed cutting rates to around 3.6% by 2026, up from an estimated trough of 2.8% in September, according to Citi.

Officials are trying to bring rates back to a more “normal” or “neutral” setting that neither spurs nor slows growth. But they don’t know what constitutes a normal rate. Policies that boost economic activity or prices could also lead officials to conclude that they should maintain a moderately restrictive rate stance. That means they would hold rates somewhat higher than a normal or neutral level.

Before the 2008-09 financial crisis, many thought a neutral rate might be around 4%, but after the crisis and an extremely sluggish recovery, economists and Fed officials concluded the neutral rate might be closer to 2%.

Interest-rate projections that officials submitted in September show most of them expected that if the economy expanded solidly with inflation continuing to cool , they could cut rates to around 3.5% next year.

Inflation based on the Fed’s preferred index was 2.1% in September, from a year earlier. A separate measure of so-called core inflation that strips out volatile food and energy prices was 2.7%. The Fed targets 2% inflation over time.

Because officials don’t have much conviction over where the neutral rate sits, they are likely to be guided by how the economy performs in the months ahead. If inflation keeps slowing and the demand for workers looks soft, officials could conclude it makes sense to continue cutting rates along the path they envisioned in September.

“We’re going to move carefully as this goes on so we can increase the chances that we get it right,” Powell said. “We’re trying to steer between the risk of moving too quicky…or moving too slowly. We’re trying to be on a middle path.”

If inflation progress stalls or ebullient financial markets raise concerns that inflation might get stuck above their target, officials might face more reservations around continuing to cut rates at a steady, meeting-after-meeting clip.

The most immediate focus is whether the Fed will cut again at its upcoming meeting in December. In September, 19 participants were about evenly divided over whether to cut rates one or two more times this year. Nine of them penciled in no more than one cut in either November or December, while 10 penciled in two cuts.

“There’s a lot to learn between now and the December meeting,” said Diane Swonk, chief U.S. economist at KPMG. “They can’t leave the door wide open, but they can’t close the door either.”

Powell said Thursday it was too soon to rule anything “out or in” at that meeting. Slowing down the pace of rate cuts is “something we’re just beginning to think about,” he said. “We’re on a path to a more neutral stance. That has not changed at all since September. We’re just going to have to see where the data lead us.”

Even before the election result, recent data suggested that cutting again would be a finely balanced decision because inflation looks like it might end the year slightly above officials’ projection, while the unemployment rate has edged lower recently, said Matthew Luzzetti, chief U.S. economist at Deutsche Bank.

The election result— which sent stock markets to new highs while raising the prospect of stronger growth, higher inflation and better labour-market outcomes—boosted the odds that the Fed forgoes a cut next month, he said.

“Those could present a strong case from a risk-management perspective to potentially skip that meeting,” said Luzzetti.

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Stocks Soar, Dollar Jumps as Trump’s Win Reverberates Through Markets

Donald Trump ’s election victory powered the Dow Jones Industrial Average to its biggest gain in two years, with a broad market rally lifting shares of banks, industrial companies and small-cap firms that are expected to benefit from continued economic expansion.

The gains were widely distributed as Wall Street bet that Trump’s promises of deregulation and tax cuts will further ignite an economy that already has posted strong gains in recent years. But sectors that were expected to benefit from Democratic policies, such as electric-vehicle companies and clean-energy related industries, declined sharply.

The promise of four years of Republican rule drove the latest rise in Treasury yields, reflecting expectations of stronger growth and inflation, while gold prices fell as fears that the election results would be contested and spark social unrest weren’t realised.

“The markets are now trading full-on Trump trade,” said Stephen Dainton, a senior executive at Barclays who oversees the lender’s investment bank including its large trading division.

Big winners included banks, which investors bet were poised to benefit from reduced regulation and a fresh acceleration in growth. Shares of JPMorgan Chase , the nation’s largest lender, climbed 11% to a new record. Wells Fargo and Goldman Sachs both rose more than 12%.

The prospect of lighter regulation and protective tariffs helped drive gains in industrials, with equipment maker Caterpillar rising more than 8% to a new all-time high and 3M adding 5%. Domestic steelmakers Nucor and Steel Dynamics gained 16% and 13%, respectively. Railroads, including Norfolk Southern and CSX , surged.

Bitcoin rose as much as 9% and flirted with $75,000, topping a previous record from March. Trump has said that he wants to make the U.S. the “crypto capital of the planet” and has pledged to create a “strategic bitcoin reserve.”

At the same time, traders also sought out companies and assets they expect to suffer during a second Trump administration.

Fears of trade wars drove down shares of ocean freight firms, including Denmark’s A.P. Moller-Maersk and Germany’s Hapag-Lloyd . Copper prices had their worst day in more than two years, dropping 5.1% as metals traders in New York reconsidered demand forecasts that hinge on the Chinese economy and the clean-energy boom.

Investors’ belief that Trump may break with the Biden administration’s push into renewable energy and electric vehicles hit companies as far away as South Korea. LG Energy Solution fell roughly 7%, as did other local EV battery makers, and Hanwha Solutions, which makes solar panels, dropped by more than 8%. In the U.S., First Solar fell 11% while Enphase Energy lost 17%.

Shares of Tesla , the electric-vehicle maker helmed by Trump ally and donor Elon Musk , bucked the trend, climbing 15%.

Investors sold bonds, driving yields higher and widening the gap between yields on ordinary Treasurys and those on inflation-protected Treasurys. That is a sign they think that the policies of a second Trump term could put upward pressure on inflation.

Many investors also believe that Trump’s tax-cut-heavy policies will add to the deficit, with the threat of a larger supply of Treasurys helping push down bond prices. The yield on the 10-year Treasury topped 4.4% for the first time since July.

That hit firms and investments that are sensitive to higher bond yields. The S&P 500’s consumer-staples sector declined 1.7% and the utilities segment lost 0.6% The real-estate sector sank 3.4%. The country’s largest home builder, D.R. Horton , dropped nearly 5% and Zillow Group fell about 7%.

Surging yields intensified a climb in the U.S. dollar, which was also boosted by the prospect of rising tariffs. Economists say tariffs can lift the U.S. currency by hurting the economies of foreign countries and discouraging Americans from spending on imported goods.

The WSJ Dollar Index, which measures the U.S. dollar against a basket of 16 currencies, rose around 1.3%. The Mexican peso lost as much as 3.4% against the dollar to its lowest level since August 2022, according to Dow Jones Market Data, before recovering. Trump recently said he could impose 200% tariffs on vehicles made in the country. The potential for tariffs also drove down the Chinese yuan.

Early wins by Trump in key states assuaged fears that it could take days or weeks for the election to be called. The Cboe Volatility Index—known as the VIX, or the market’s fear gauge—plunged to its lowest level since late September.

The relative calm had investors hoping more gains lie ahead. The S&P 500 had already risen 21% through Election Day, its best performance in a presidential election year since 1936, when Franklin Roosevelt was in office. The Dow Jones Industrial Average was up 12%, its best election-year performance since 1996, when Bill Clinton was in the White House.

“There’s a lot of relief that there’s a clear-cut outcome and that markets can move on to things that are quite frankly more important than who sits in the White House,” said Ross Mayfield, investment strategist at Baird.

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For These Collectors, It’s Still All About the Cash

Even as the world increasingly moves toward digitised commerce, where transactions are conducted with the tap of a credit card and billions of dollars are moved electronically between banks, there is one group of people for whom hard cash is still king: collectors.

As an alternative asset class, collectible banknotes offer significant potential value to investors, and the market for these paper artefacts is thriving. Aris Maragoudakis , director of world currency auctions at Stack’s Bowers Galleries in Costa Mesa, Calif., estimates the hobby sees annual trade of well over $500 million globally.

In fiscal year 2016, the World Paper Money department at Stack’s recorded about $4 million in sales. By fiscal year 2024, this figure had risen to $14.5 million. The company reported an 18% increase in sales for world paper money (which doesn’t include U.S. paper-money numbers) in fiscal year 2023, followed by 25% growth in fiscal year 2024.

Elsewhere, the Noonans Mayfair London realised £5 million, or about $6.5 million, in world banknote sales in 2023, up from £2.5 million the previous year, a representative said.

The rise of digital technology has helped broaden the base of collectors. Online auctions, forums and databases have made it easier for collectors to connect, trade and research. Greater access to information about collectible money, as well as to collectible banknotes themselves, have transformed the hobby from a game of chance to a strategic pursuit where enthusiasts can actively search for and acquire valuable pieces.

“The advent of social media such as Instagram and WhatsApp have brought in a spate of new collectors, especially youngsters,” says Rezwan Razack , a specialist in vintage banknotes and chairman of the Indian chapter of the International Bank Notes Society, or IBNS.

While social media has made more people aware of older paper currencies and their histories, the declining use of physical banknotes has made them even more alluring and fascinating to collectors.

Where is the value?

Banknotes routinely become obsolete due to political shifts, security upgrades, monetary policies and technological advancements. The question is: Which ones are worthy possessions?

A plethora of factors underpin the desirability of collectible paper money. The major ones are:

• Condition:  The condition of a piece can have a significant impact on its value. “There are bills that sell for $1,000 with a fold or two, but finding one free of any folds, stains, or tears could be worth several times that,” says Maragoudakis.

The condition of a bill is evaluated based on a 30-point scale ranging from poor to uncirculated crisp. Within each condition, a bill is given a number grade; a higher number—on a scale typically from 1 to 70—means the banknote is in better shape.

For example, a 10,000-yuan note issued in 1951 by the People’s Bank of China, graded Very Fine 20, sold for $150,000 at a Stack’s Bowers auction. Three years later at another Stack’s Bowers auction, a similar note in better condition, graded Almost Uncirculated 50,  fetched $358,500.

• Serial number : Banknotes with striking serial numbers are often worth more to collectors than those without. On eBay, a rare polymer £20 bill  with the serial number AA44 444444  received 16 bids and sold for more than £317.

A set of four exceptionally rare  Chinese 1953 10 yuan notes from the People’s Bank of China  recently sold for $432,000 because in addition to their quality, they were consecutive in serial number.

• Scarcity : The appeal and worth of banknotes, as with other collectibles, are often tied to their rarity.

For instance, high-value banknotes were often printed in limited quantities due to their significant purchasing power, says Hakim Hamdani , director at large and a collector at the Netherlands branch of the IBNS. When these high-denomination notes are discontinued, many people cash them in rather than keeping them as collectibles.

Take the 1921 10,000-shilling note from British East Africa (now Kenya and Tanzania), of which few were printed and issued. At that time, it was equivalent to about $2,000, a substantial sum in 1920s colonial Africa. When they were demonetised, most were redeemed, making the few remaining in private hands highly desirable.

Dennis Hengeveld , president of World Banknote Auctions in Sacramento, Calif., says that depending on the condition, some of these notes have fetched between $35,000 and just over $100,000 at auctions.

A rare  $500 Canadian bill  from 1911  brought C$528,750  (about $386,400) at a recent auction, the largest sum ever paid for a Canadian banknote. The specimen features the image of Queen Mary and is one of only four of the bills known to exist.

• Error notes : Governments often withdraw banknotes from circulation to deter counterfeiting, but also due to printing anomalies such as incorrect signatures, numerical discrepancies, misprints and typographical errors. Such deviations can elevate their value among enthusiasts.

In the U.S., double denominations—such as a front displaying a $10 bill and the reverse displaying a $20 bill—are the most prized error notes. The value of some of these pieces could top $85,000, according to Heritage Auctions.

How can I get started?

Despite the potential for a lucrative return, experts say the primary motivation for building a collection should be enjoyment and an appreciation of the history that banknotes provide. It would be best to build a collection with the idea of having fun, says Hengeveld of World Banknote Auctions, which was recently acquired by Stack’s Bowers.

Of course, it’s essential to do your due diligence to avoid fraud. Always buy notes from established dealers and confirm their authenticity with reputable grading services. Independent grading companies such as Paper Money Guaranty and Professional Coin Grading Service provide authentication and grading to ensure notes are genuine and their condition accurately assessed.

Auction houses and local dealers offer currency notes in different price ranges. Online retailers (eBay, Amazon.com, Collectibles & Currency), dealers and galleries (Certified Coin Exchange, George H. LaBarre), and numismatic shows (the MIF Paper Money Fair and World’s Fair of Money) are other useful sources.

As well, there is no shortage of stories where people discovered highly valuable collectible banknotes in attics, books, dressers and photo frames of deceased family members. In Ontario, a rare Canadian $500 bill from 1911  was discovered among the personal belongings of a deceased individual. The nearly discarded banknote, one of only three in existence, brought $322,000 at auction.

Those looking to dip their toes into collectible money may find valuable insights in trade magazines including Bank Note Reporter and the Greensheet, or books such as the U.S. Error Note Encyclopedia and Standard Guide to Small-Size U.S. Paper Money.

Additionally, Paper Money Guaranty, the Smithsonian Learning Lab and other websites can offer a wealth of information on various aspects of grading, collecting and how to properly care for banknotes.

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Climate Change Can Take Big Toll on Asian Economies, Inaction Could Cost More, ADB Report Says

Countries in Asia-Pacific will need to spend big to adapt to climate change. But the cost of inaction could be higher, according to a new report by the Asian Development Bank.

Left unchecked, climate change could punch a 17%-sized hole in the region’s economic growth over the next decades, the Manila-based bank said Thursday.

“The window to stay within the 1.5°C target of the Paris Agreement is rapidly closing,” the ADB said.

The international treaty aims to limit the average rise in global temperatures to that threshold, beyond which experts expect climate change to have increasingly disastrous consequences. In the nine years since the agreement was adopted, inaction has put that goal nearly out of reach, the multilateral bank said.

With greenhouse-gas emissions reaching record highs, nations need to dramatically increase—and immediately start delivering—efforts to get on track for 1.5°C, a United Nations Environment Programme report said last week. Failure to do so will lead to debilitating impacts to economies, the report said.

Asia-Pacific’s position in the climate crisis is a tricky one: it’s both home to some of the most vulnerable economies and a major polluter, contributing over 50% of global GHG emissions.

If emissions breach critical levels, ADB estimates climate change could reduce Asia-Pacific’s gross domestic product by 17% in 2070. Rising sea levels threaten coastal assets and populations, while heat waves would sap labor supply and productivity, and climate-dependent sectors like agriculture, forestry, and fisheries face shocks that will stifle output.

Estimates from the Deloitte Economics Institute calculate that about 75% of Asia-Pacific’s GDP is at high risk of climate disruption. This stands to affect at least half of the world’s labor force, which is in the region and in vulnerable industries. Climate inaction could lead to regional economic losses of about $96 trillion by 2070, the institute said in a report.

Asian countries have made strides toward decarbonising, but just maintaining policies implemented so far will lead to dangerous levels of global warming, the ADB said.

Taking the right type of action won’t come cheap. Estimates for Asia vary widely, in part due to different geographical definitions, but consensus is that funding is well below where it needs to be.

The ADB report estimates Asia-Pacific needs to invest anywhere from $102 billion to $431 billion annually to adapt to climate change. That far exceeds the $34 billion committed over 2021-2022.

Globally, the U.N. calculates the net-zero transition needs $0.9 trillion to $2.1 trillion a year between 2021 and 2050. That “is substantial but manageable in the broader context of the close-to-US$110 trillion global economy and financial markets.”

It remains technically possible to get on a 1.5°C pathway, as solutions like solar and wind power hold promise for fast, sweeping emissions cuts, the U.N. report said.

Getting back on track could be a big boost for Asia-Pacific economies.

The region is well-placed to benefit from the energy transition, the ADB said. It has massive potential for renewable-energy generation and can produce some of the world’s cheapest renewable electricity, it said. Advantages like fast-growing economies, a large workforce and strong manufacturing base equip Asia to develop the technologies needed for global decarbonisation.

That presents a wealth of opportunities for investors.

If governments formulate consistent policies and build climate-oriented financial systems, that can draw the private capital that’s key to plugging the funding gap, ADB said.

Policy uncertainty over could deter investment, particularly in the case of a change of political administrations. Investors hold more sustainable assets when countries adopt climate laws, and misaligned policies reduce incentives for private investors, ADB said.

That is particularly relevant in a year that has seen elections across Asia, including in India, Indonesia and Japan. The upcoming presidential election in the U.S. is in especially sharp focus as the outcome has implications for climate-change efforts.

That’s because of the U.S.’s role as a key player in green innovation and international cooperation on climate commitments and financing, as well as a major trading partner, said ADB principal economist Shu Tian.

Policy uncertainty from a key player can significantly affect the international climate agenda, she said.

“The U.S.’s stance on climate action influences the low-carbon transition through market mechanisms, affecting consumers, suppliers, and investors,” she said. “This, in turn, could impact climate investments across the [APAC] region.”

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The Wealthy Are Overpricing Their Homes. Auctions Show Just How Much.

Randy and Robin Landsman had been trying to sell their Manhattan penthouse for over a year when they turned to the auction market this summer. First listed for $12.2 million, their triplex in the sought-after Tribeca neighbourhood came with more than 2,000 square feet of terraces, a floating staircase and a private elevator.

At auction, the roughly 3,300-square-foot property sold for $5 million, less than half of what they had originally asked and little more than they paid for it two decades ago. “It was obviously a stupid mistake,” Randy said of deciding to auction the home.

More closely associated with pricey art or collectibles, auctions are on the rise for luxury real estate, with auction houses reporting a dramatic spike in the number of high-net-worth sellers seeking their services since 2020. Amid a slowdown in luxury home sales, auction companies are pitching homeowners on their ability to market unique properties to a range of deep-pocketed buyers beyond local markets and to sell them within a precise time frame.

Emboldened by the trophy home prices they see on television, or stuck on a major sale that happened previously in their neighbourhood or city, sellers who aggressively priced their luxury homes often have been forced to repeatedly cut their asking prices, agents said. Then, when all else fails, they turn to auction.

The increasing disconnect between what luxury homeowners think their properties are worth and what buyers are willing to pay is helping to drive up interest in auctions. But aspirational sellers are finding that auctions don’t always yield their desired outcome—and that they aren’t without risks.

La Dune, an oceanfront Hamptons estate that was listed for $150 million in 2022, sold at auction for $89 million this year. The One, a Bel-Air megamansion once slated to list for $500 million, sold for $126 million at auction in 2022. Villa Firenze, a Los Angeles estate in the storied Beverly Park neighbourhood, sold for $51 million at auction in 2021, having been initially listed for $165 million. It has since traded hands again for $52 million.

Earlier this year, former “Real Housewives of New York City” star Sonja Morgan auctioned her Upper East Side townhouse, which had been on and off the market for more than a decade. Once listed for as high as $10.75 million, its price had been slashed more recently to $7.5 million. It fetched $4.595 million in the auction.

Misha Haghani, founder of real-estate auction house Paramount Realty USA, said he frequently counsels prospective auction clients that they have been too aggressive in their original pricing.

“I will tell the seller, ‘You’ve been on the market for X period of time at three different price points. Why hasn’t it sold? It’s obvious why. Because it’s mispriced,” he said. Almost every owner “thinks their home is better than it actually is.”

The number of luxury home sales in the U.S. declined 10.6% in the third quarter from a year earlier, according to brokerage Redfin . Despite the market slowdown, sellers have been reluctant to lower prices. Luxury home prices rose 9% in that same time to the highest third-quarter level on record, growing nearly three times faster than nonluxury prices.

Since the pandemic boom, high-end properties are also taking longer to sell. On average, luxury listings spent 46 days on the market during the third quarter, up from 36 days during the same period in 2021, Redfin data show.

White Elephants

Haghani, who founded Paramount in 2009, said his company has seen a flood of interest from high-end sellers since the pandemic, 99% of it now inbound from homeowners approaching Paramount. Scott Kirk , chief executive of home-auction competitor Interluxe Auctions, founded in 2013, said business has more than doubled every year for the last three years.

Auctions tend to attract the real-estate world’s white elephants—properties that may be quirky, highly personalized or ultraluxury, resort-style homes in neighbourhoods where that type of housing is atypical.

A White House replica in the San Francisco Bay Area had been designed for the oldest son of William Randolph Hearst and included a duplicate of the Oval Office, East Room and White House Rose Garden. In Whitefish, Mont., former pro football player Drew Brees built a home that resembled a treehouse. It was perched 15 feet above the ground inside a forest. And a castle-style home owned by former baseball star Derek Jeter in New York’s Greenwood Lake area had a medieval-looking tower, rooftop battlements and a copy of the Statue of Liberty.

“The properties that we represent that do really well at auction, they’re not fungible,” said Kirk. “These properties have extremely unique attributes about them that make them very difficult to comp.”

By the time a property comes to auction, it has likely already undergone at least one price reduction, said Haghani.

“When they come to us, hopefully they’ve had some sense knocked into them,” he said of sellers. “They’re tired, they’ve had enough. They say, ‘As long as the offer is decent, as long as it’s fair, I’m going to take it even if it’s not exactly what I wanted before.’”

For many sellers, the draw of an auction is the set timeline. Where their home could linger on the market for months or years listed the traditional way, the auction template offers a sale date, as long as bids reach the minimum, if one was set. Auction companies also promise to market a property more widely than a local broker, to both a national and international audience.

In 2018, Randy Singer, a retired entrepreneur, listed the family’s historic home in the West Chop neighbourhood of Martha’s Vineyard without a real-estate agent for $16.9 million, inspired by a $17 million listing nearby. He eventually worked with at least three agents and cut the price to as low as $7.9 million in May. It has been in Singer’s family since 1949, when it was purchased by his grandfather, and needs significant updates, he said.

Now, Paramount is auctioning the property in November with a $6 million reserve price, which acts as a minimum.

“Nothing has worked,” Singer said. “We’ve been trying so long, and I need to move on with my life.”

Corporate consultant Ed Vilandrie and his wife, Martha Cavanaugh, are glad they decided to auction their 144-acre Vermont estate with Interluxe, just 45 days after listing it for $6.275 million. They had a hunch the Peacham, Vt., property would secure a better price with the broader marketing of an auction because of its unique scale for the local area. They were told that the previous owner spent upward of $18 million to construct a family compound there. The couple paid $2.2 million for it in 2011.

Located beyond the typical high-end pockets of Vermont, it might not have captured the attention of out-of-state buyers without an auction setting, they said.

After three days of bidding in October, the auction closed with a high offer of $5.88 million, including the 12% buyer’s premium that covers a commission to the auction house and fees for the agents who worked on the deal. Excluding that premium, the roughly $5.25 million deal was still well above their $3.9 million reserve price.

How it works

A number of auction companies focused on luxury homes emerged in the wake of the financial crisis and have since tried to shake the stigma that auctions are just for bankruptcy or financial distress.

Concierge Auctions, Paramount and Interluxe are now among the largest players, and some top brokerages have issued formal recommendations of auction houses to their agents as prescreened vendors. In 2021, Realogy , the parent company of Sotheby’s International Realty now known as Anywhere Real Estate, partnered with Sotheby’s art auction house to buy a majority stake in Concierge. Paramount has partnerships with Compass and Serhant. They have marketed heavily to rebrand auctions as a legitimate alternative to the traditional sales method, rather than a last-ditch option.

“There’s a lot of education that we do,” said Interluxe’s Kirk. Sellers are “appreciating and really understanding that auctions are not an admission of failure.”

The auction companies all have slightly different strategies. Paramount offers a format that calls for a transparent online auction where the bidding is visible in real time, but also offers a sealed bid process whereby prospective buyers submit their offers privately in best-and-final style. The sealed-bid process is a kind of hybrid between an auction and a traditional sale. In both instances, if an offer doesn’t meet the reserve price, the seller isn’t obligated to sell.

In the vast majority of cases, Paramount says it places a reserve price on the property. Interluxe puts reserve prices on 96% of homes, Kirk said.

Paramount takes a fixed 6% commission on any sale, and agent fees are charged on top of that. In Interluxe auctions, buyers pay the sellers a 12% buyer’s premium, which is then shared to varying degrees with the auction house and the agents. Neither company makes any money if a property doesn’t hit its reserve price.

Many sellers who have worked with Concierge say executives encouraged them to proceed without a reserve price in order to maximise interest and momentum. Whether there’s a reserve price or not, Concierge takes a 12% to 15% buyer’s premium as a commission, plus there are agent fees. It markets the property heavily before the auction, and tries to generate early offers by offering prospective buyers a “starting bid incentive,” or 50% discount on the buyer’s premium if they submit a winning bid before the start of the auction.

Not every auction ends in a sale.

A few years ago, former Yankees player Derek Jeter’s home in Greenwood Lake, N.Y., failed to sell at auction after bids fell short of the $6.5 million reserve price. The property—with a roughly 12,500-square-foot residence—initially hit the market asking $14.75 million in 2018. Haghani, whose firm handled the auction, said he felt the reserve price was a “very tall order” for the area, even with extensive marketing and press coverage.

The home eventually sold in July for $5.1 million.

Some sellers see the writing on the wall and never go through with the auction at all.

Concierge, for example, holds a “green-light call” before the auction with sellers who forgo a reserve price. The call typically takes place after a two-week marketing blitz when prospective buyers are enticed to make early bids. During the call, sellers give a final OK for the auction to proceed or exercise their right to cancel.

Real-estate agent Kylie McCollough of Mott & Chace Sotheby’s International Realty said one of her clients, the owner of an 8,000-square-foot penthouse listed for $5.9 million, considered an auction last year because the unit was unusually large for the Portsmouth, R.I., area. The homeowner pulled the plug on the auction with Concierge after early bids came in between $2 million and $3 million. “The risk is, that could be as high as it goes,” she said. “Our client did not want to take the risk.”

After canceling the auction, the property sold for $4.5 million about six months later.

The owner of the White House replica in the Bay Area canceled its auction with Concierge in June when early bids fell short of his expectations, said listing agent Alex Buljan of Compass. The roughly 24,400-square-foot mansion in Hillsborough, Calif., originally listed for $38.9 million, was priced at $36.9 million at the time, with expected starting bids in the $10 million to $17 million range. The property just sold for $23 million.

Brees’s treehouse auction was also canceled, according to listing agent Sean Averill of PureWest Christie’s International Real Estate.

‘Vomited and Blacked Out’

Pricing a multimillion-dollar home can be more of an art than a science. In August, 49% of luxury homes sold below their initial asking price with an average discount of 9%, according to Zillow.

In an auction, it’s even more common. A Wall Street Journal analysis of properties handled by Concierge, which calls itself the world’s largest auction house for luxury real estate, found that a majority of home auctions sell below list price.

The average discount was 46% for 51 home auctions last year, according to the Journal’s analysis of Concierge’s publicised sales. The analysis only included U.S. sales that closed and where recorded prices were publicly available. This year, 39 closings through Sept. 18 had an average discount of 41%, the Journal found.

An analysis of Interluxe auctions, based on a list of sales the company provided, shows seven publicly recorded closings in 2023 with an average discount of about 26%. Through Sept. 18 of this year, it had four closings with an average discount of about 21%. The analysis only included sales that closed and where recorded prices were publicly available.

Paramount declined to provide its statistics, saying they weren’t readily available.

Concierge declined to comment for this article beyond a statement saying it stands by its results. “We specialize in high-value properties that are challenging to price and often require multiple years to sell. Our transparent platform determines market value through competitive bidding, with final sale prices representing the market price in a 60-day process resulting in a compelling value proposition for our sellers,” a company spokeswoman said.

Rather than listing their East Hampton estate, financial-services executive Erik Stern and his wife, Michelle Stern, went straight to auction. They said they were referred to Concierge by Charles Stewart , the CEO of Concierge’s part-owner Sotheby’s, who had been renting their property.

“It’s almost like a stock market, where you’ve got buyers and sellers and they come to the market price,” Erik said. “So I thought this actually sounds much more reasonable to me than just putting it on [the market] and seeing what happens.”

He said they expected that the house, a modernist property designed by architect Norman Jaffe, was worth around $20 million or more, based on the 3-acre parcel of land alone. The Sterns said Concierge representatives didn’t want to put a reserve price on the property because they believed it would stifle momentum, but the couple were assured there was a high level of interest.

“There was all this talk about, ‘You know, we’ve got people flying in from Switzerland to see your home, people from all over the U.S., a lot of Texans,’” said Michelle.

The auction ended in minutes and closed at $15 million, far less than the Sterns had expected.

“I think I vomited and blacked out,” Michelle said. The Sterns were offered $100,000 by Concierge to settle their claims that Concierge had misled them; the settlement agreement contained a confidentiality provision that would have prevented the Sterns from speaking negatively about Concierge. They declined.

The Landsmans, owners of the Tribeca penthouse, also hadn’t set a reserve price. They said they agreed to go ahead with their auction after representatives from Concierge predicted a “very active” auction and told them seven bidders had registered to participate.

Much of the couple’s retirement nest egg was tied up in the property, located in an 1800-era building, said Randy Landsman, who is the CEO of a financial-advisory firm.

“They told us it’s going to be a lot of activity. They told us they were speaking to their bidders frequently,” Randy said.

Once the auction began, none of the registered bidders submitted new bids. The property sold by default for the highest pre-bid of $5 million. Having agreed not to place a reserve price on the apartment, they were forced to accept the bid.

“They called a meeting right after the auction was over, and they said, ‘Sorry it didn’t work out,’” said Randy.

The deal fell apart soon after; the buyer pulled the plug after the Landsmans failed to close by the agreed-upon date, the Landsmans said. The couple said they have since been served with a letter for arbitration by Concierge, which says it’s still due its commission.

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Fitch Affirms Australia’s Rating, But Flags Mounting Budget Risks

SYDNEY—Fitch Ratings affirmed Australia’s AAA sovereign credit rating with a stable outlook, even as it highlighted that the country’s high debt relative to countries with similar ratings.

Fitch said the country retains a commitment to the same rules for fiscal sustainability that helped to underpin close to 30 years of economic expansion before the pandemic.

“Australia’s rating is underpinned by the country’s high income per capita and sound medium-term growth outlook, as well as strong institutions and an effective policy framework,” Fitch said in a statement on Monday

It warned that Australia’s fiscal metrics are set to weaken modestly in the next two years. But it anticipated deficits and overall debt would be contained over the medium term, supporting the stable outlook.

The affirmation of the top rating comes despite ongoing concerns about the pace of spending over the past year as the federal government deals with an explosion in costs linked to the national disability insurance scheme while at the same time cutting income taxes.

Government spending measures aimed at cushioning the rising cost of living on households, and falling commodity prices, will put pressure on the budget, Fitch said.

Australia’s general government deficit, which consolidates federal, state and local governments, will reach 2.6% of GDP in the 12 months through June, 2025, from 1.6% in fiscal 2024 and 0.8% in fiscal 2023, Fitch said.

“Aggregate state deficits have been high over the past couple of years, offsetting surpluses at the federal level,” Fitch said. “We also forecast deficit reduction at the state level to be gradual, given a still-large infrastructure development pipeline.”

Rising aged care and the NDIS will continue to pressure the budget, though efforts are under way to contain these costs, it added.

Fitch forecasts economic growth to slow to 1.1% in 2024, from 2.0%, but expects a gradual acceleration in activity from late this year, driving growth to 1.7% in 2025 and 2.1% 2026.

“A recovery should be supported by income tax cuts, probable monetary easing in 2025 and a healthy labor market, which should buoy household balance sheets,” the ratings agency said.

Fitch expects the Reserve Bank of Australia will start to cut interest rate cuts in February, with the policy rate reaching 3.50% by the end of next year, after being on hold at 4.35% since November 2023.

Underlying inflation appears set to trend down to the RBA’s 2%-3% target band by end-2025, from 3.5% in the third quarter, the ratings agency said.

“Still, risks tilt toward delayed cuts given persistent services inflation and a still-tight labor market, with brisk employment growth, low 4.1% unemployment rate and a record participation rate in September 2024,” it added.

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Lamborghini Debuts Its First Hybrid Super-SUV

Lamborghini CEO Stephan Winkelmann  has made it clear the company, which makes some of the fastest cars in the world, would not speed into the era of electrification.

“Our first steps in that (electrification) direction will be plug-in hybrids throughout the lineup,” he said in a 2022 interview with Penta. “This is all very easily welcomed at Lamborghini. The equations are easy. We always promise more performance than the generation before for all our cars, and we will do so while maintaining sustainability. By 2025, we will be able to cut our overall emissions by 50% with all of the hybrid models added.”

Proving Lamborghini and Winkelmann are as good as their collective word, the time of watts and volts arrived in Bologna, Italy, with the debut of the 2025 Lamborghini Urus SE. The first hybrid super-SUV from the proud Italian firm, which starts at $275,000 marries the familiar internal combustion specs of its growling engines with battery power looking not so much to save the planet as to propel vehicles across it with more alacrity.

The Urus SE is the first hybrid plug-in version of Lamborghini’s SUV, and it’s aimed to outperform its all-internal combustion rivals, such as the Aston Martin DBX707 and the Bentley Bentayga. The PHEV (Plug-in Hybrid Electric Vehicle) Urus SE relies on an 800 CV hybrid powertrain, surpassing any previous Lamborghini SUV model in torque and power numbers.

As for external styling on the Urus, Lamborghini takes after its competition at Aston Martin or Ferrari by trying to make an SUV that looks as little like an SUV as possible.
Courtesy of Lamborghini

The machine’s twin-turbo 4.0-litre V-8 engine is reengineered and partnered with an electric powertrain to produce 620 CV. For the uninitiated, CV is the abbreviation of Chevaux-Vapeur and is similar to horsepower. Usually, HP converts to just a little less than CV—at least allowing the automotive enthusiasts from the U.S. and Europe to get a traditional sense of vehicle power for gas-powered or hybrid vehicles without needing a conversion calculator.

To make a long engineering story as quick as the Urus SE, if you add together the internal contrition power plant and the e-motor, the final output is 800 CV. The result is a Lamborghini that cuts its emissions by 80% without sacrificing performance, comfort, or driving excitement.

The thinking process on when and how to release this plug-in hybrid began before the company’s 2021 pledge to cut CO2 emissions, says Stefano Cossalter, the Urus model line director.

Courtesy of Lamborghini

“This plan gave momentum to a profound and constant research of opportunities and challenges involved in the transition to electrification,” Cossalter says. “The plan started in 2023 with the launch of the Revuelto [sold out into 2026], our first HPEV (high performance electrified vehicle), and continues with the launch of the hybrid version of our Super SUV Urus SE.”

Cossalter lays out that the slow and steady march to electrification will continue next year with the release of the Temerario, described by Lamborghini as the successor to the popular Huracan and “the first super sports car in the history of the … brand to be equipped with a V-8 twin-turbo engine paired with three electric motors.” Then, the automaker will look to the horizon for its introduction of the Lanzador, the company’s first BEV (battery electric vehicle) in 2028.

The hybrid version offers improved performance over the 100% gas Urus. A magnet synchronous electric motor located inside the SE’s eight-speed automatic transmission tied into the four-wheel-drive system can boost the V-8 engine, offering additional acceleration. Meanwhile, that motor can provide enough power to transform the Urus SE into a totally electric vehicle with a range of about 35 miles in EV mode.

With the new drive system noted, Lamborghini’s engineers could turn to performance specs. They built in a new, centrally located longitudinal electric torque vectoring system with an electro-hydraulic multi-plate clutch. That’s a lot of fancy tech talk to say the vehicle can throw power and grip back and forth between the front and rear axles wherever the onboard system senses it’s needed. A new electronic limited-slip differential on the rear axle helps give the Urus SE oversteering when needed. The end result is an SUV that packs the feel of a Huracan on the road.

That supercar feel in an SUV is the experience Lamborghini refuses to abandon in the Urus SE, Cossalter says.

“We didn’t come to compromises in the hybridisation process,” he says. “We wanted the Urus SE to preserve the DNA of the original project and enhance the experience for the driver. For those reasons, we decided not to downsize. We kept a V-8 engine with its strong character and voice, and then added some spice to the dynamic behavior by changing the all-wheel-drive architecture. The result is we have more power, more torque, more speed, more fun.”

As for external styling on the Urus, Lamborghini takes after its competition at Aston Martin or Ferrari by trying to make an SUV that looks as little like an SUV as possible. The profile is lowered, and the lines sweeping and tapering from nose to tail, as though Lambo’s in-house designers want to hide the size and functionality of an SUV inside the shape of the familiar Lamborghini supercars of the past.

However, driving the Urus does not feel much like a traditional Lamborghini supercar simply because the driving position is higher and more upright compared to, say, an Avantador that puts the driver’s backside close to pavement. Regardless of where one sits, the acceleration, noise, and tight handling lives in a Urus as happily as it does in any other Lambo.

As its first volume consumer step into the hybrid world, the Urus SE tells Italian supercar enthusiasts to keep the faith.

“The Urus SE points to the future with electrification while keeping its heritage intact,” Cossalter says.

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The Little Sins We Commit at Work—and the Bosses Who Are Cracking Down

Ever used the office printer for your kid’s homework assignment or scrolled Facebook Marketplace during an all-hands Zoom meeting? Fair warning: Your employer may be paying close attention.

Big companies on the hunt for efficiency are deploying perk police to bust employees for seemingly minor infractions that, by the letter of company law, can result in termination.

“We have had lots of requests for new controls,” says Katie MacKillop, U.S. director of Payhawk, which administers company credit-card accounts and watches for misuse.

Clients are asking Payhawk to restrict when and where company cards work. For example, a company can limit a lunch allowance to be available only on weekdays from 11 a.m. to 2 p.m. and be usable at Chipotle but not at Kroger . In partnership with Visa and Mastercard , Payhawk is developing a feature that sends real-time spending alerts to corporate finance teams and allows them to instantly block suspicious transactions by employees.

MacKillop’s firm doesn’t track what happens to employees who violate company policies, but she says there is little doubt employers are taking codes of conduct more seriously.

That helps explain reports of crackdowns at Meta , where employees were fired for spending $25 meal allowances on other items, Ernst & Young dismissing workers who watched multiple training videos at the same time, and Target canning employees who jumped the line to buy coveted Stanley water bottles ahead of the general public. The companies declined to comment on the incidents.

As the employer-employee power struggle tilts in companies’ favour, some businesses are using strict rules enforcement to make an example of rule-breakers or reduce payroll without having a real layoff. An employer feeling buyer’s remorse after a post pandemic hiring spree can use the company handbook to push out unwanted employees, says human-resources consultant Suzanne Lucas.

“When you are desperately hiring, you’re definitely overlooking things,” says Lucas, who cheekily brands herself the Evil HR Lady. “When you need to cut head count, you tighten up the rules.”

Workers argue many so-called perks are designed to increase productivity. A free meal is an enticement to stay at your desk. A recorded HR tutorial is less a reprieve from the awkwardness of in-person, sexual-harassment training than an invitation to keep plugging away while paying half attention to a video on your second monitor.

Why gin up excuses to fire people instead of simply announcing a round of job cuts? A few reasons, Lucas says.

Layoffs imply a business is struggling, and companies may want to avoid shaking the confidence of customers or investors. Employers often feel obligated—or are contractually bound—to offer severance packages to laid-off workers. Firing people for cause can save money, she says.

Then there’s the effect on a company’s remaining employees. Few things put workers on notice like seeing colleagues pink-slipped for minor offences. And, as a matter of principle, stealing is stealing even if it is a small amount of company money or time.

Warning shot

If a goal of harsh consequences is to keep people in line, then it’s working on Matt Tedesco.

When he read a Financial Times report that Meta fired employees who spent Grubhub meal allowances on things like acne pads and laundry detergent in a saga dubbed “Grubgate,” he flashed back to a similar episode at a defunct company where he used to work. He says a half dozen colleagues in sales were shown the door because they used meal stipends to buy groceries.

Tedesco, 47, describes himself as a rule follower in general and says he is doubly sure to do everything by the book in the current climate. He started this fall as a sales account executive at Hearst after being laid off by S&P Global last year.

“It’s hard to get a job right now—it took me months,” he says. “From an employee standpoint, my takeaway is don’t abuse any privilege because it’s not worth the risk.”

People in a range of industries admitted to me privately that they’ve broken rules like these in the past but said they’d never cop to it publicly. One likened today’s workplace to a street with a 30 mph speed limit, where you routinely get away with driving 37 mph and feel blindsided when you’re pulled over and ticketed. Enforcement levels fluctuate, this person said, and seem to be high right now.

Cracking down is a time-honoured tactic when companies feel financial pressure. In 2009, in the teeth of the Great Recession, a former private-client relationship manager at Fidelity told the Fort Worth Star-Telegram that he and three colleagues lost their jobs for running fantasy-football leagues at work, in violation of a corporate policy against gambling. The stakes in his league: $20. Fidelity had laid off 1,700 employees earlier that year.

And in 2018, when Wells Fargo announced significant head count cuts, the bank fired or suspended more than a dozen bankers who put dinners on the company tab and doctored the receipts. The bank said at the time that it pays for meals when employees work late, but some ordered takeout before the allowed hour and changed the timestamps on the bills.

Without knowing all the details, it can be hard to understand why companies police small dollars when they appear to spend freely on pricier items, says Jennifer Dulski , chief executive of Rising Team, a maker of employee-engagement software. She notes Meta offices are known for vending machines stocked with headphones, keyboards and other electronics available to employees free of charge, yet the company is getting serious about lunch money.

“They’re either weeding or just trying to make an example of behaviour they think is inappropriate,” Dulski says.

Employers have good reasons to be sticklers in some cases, says Cedar Boschan, a forensic accountant in Culver City, Calif. Companies can invite tax trouble if money earmarked for perks and business expenses is misspent on other things.

So, don’t put all of the blame for policy crackdowns on human resources. Save some for the one department that HR might beat in a popularity contest: accounting.

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Wealthy Collectors Reveal Signs of Strength in the Art Market—Outside of the Auction Houses

Sky-high pricey artworks may not be flying off the auction block right now, but the art market is actually doing just fine.

That’s a key takeaway from a 190-plus page report written by Art Economics founder Clare McAndrew and published Thursday morning by Art Basel and UBS. The results were based on a survey of more than 3,600 collectors with US$1 million in investable assets located in 14 markets around the world.

That the art market is doing relatively well is backed by several data points from the survey that show collectors are buying plenty of art—just at lower prices—and that they are making more purchases through galleries and art fairs versus auction houses.

It’s also backed by the perception of a “robust art market feeling,” which was evident at Art Basel Paris last week, says Matthew Newton, art advisory specialist with UBS Family Office Solutions in New York.

“It was busy and the galleries were doing well,” Newton says, noting that several dealers offered top-tier works—“the kind of stuff you only bring out to share if you have a decent amount of confidence.”

That optimism is reflected in the survey results, which found 91% of respondents were optimistic about the global art market in the next six months. That’s up from the 77% who expressed optimism at the end of last year.

Moreover, the median expenditure on fine art, decorative art and antiques, and other collectibles in the first half by those surveyed was US$25,555. If that level is maintained for the second half, it would “reflect a stable annual level of spending,” the report said. It would also exceed meet or exceed the median level of spending for the past two years.

The changes in collector behaviour noted in the report—including a decline in average spending, and buying through more diverse channels—“are likely to contribute to the ongoing shift in focus away from the narrow high-end of sales that has dominated in previous years, potentially expanding the market’s base and encouraging growth in more affordable art segments, which could provide greater stability in future,” McAndrew said in a statement.

One reason the art market may appear from the outside to be teetering is the performance of the major auction houses has been pretty dismal since last year. Aggregate sales for the first half of the year at Christie’s, Sotheby’s, Phillips, and Bonhams, reached only US$4.7 billion in the first half, down from US$6.3 billion in the first half a year ago and US$7.4 billion in the same period in 2022, the report said.

Meanwhile, the number of “fully published” sales in the first half reached 951 at the four auction houses, up from 896 in the same period last year and 811 in 2022. Considering the lower overall results in sales value, the figures imply an increase in transactions of lower-priced works.

“They’re basically just working harder for less,” Newton says.

One reason the auction houses are having difficulties is many sellers have been unwilling to part with high-value works out of concern they won’t get the kind of prices they would have at the art market’s recent highs coming out of the pandemic in 2021 and 2022. “You really only get one chance to sell it,” he says.

Also, counterintuitively, art collectors who have benefited from strength in the stock market and the greater economy may be “feeling a positive wealth effect right now,” so they don’t need to sell, Newton says. “They can wait until those ‘animal spirits’ pick back up,” referring to human emotions that can drive the market.

That collectors are focusing on art at more modest price points right now is also evident in data from the Association of Professional Art Advisors that was included in the report. According to APAA survey data of its advisors, if sales they facilitated in the first half continue at the same pace, the total number of works sold this year will be 23% more than 2023.

Most of the works purchased so far were bought for less than US$100,000, with the most common price point between US$25,000 and US$50,000.

The advisors surveyed also said that 80% of the US$500 million in transactions they conducted in the first half of this year involved buying art rather than selling it. If this pattern holds, the proportion of art bought vs. sold will be 17% more than last year and the value of those transactions will be 10% more.

“This suggests that these advisors are much more active in building collections than editing or dismantling them,” the report said.

The collectors surveyed spend most of their art dollars with dealers. Although the percentage of their spending through this channel dipped to 49% in the first half from 52% in all of last year, spending at art fairs (made largely through gallery booths) increased to 11% in the first half from 9% last year.

Collectors also bought slightly more art directly from artists (9% in the first half vs. 7% last year), and they bought more art privately (7% vs. 6%). The percentage spent at auction houses declined to 20% from 23%.

The data also showed a shift in buying trends, as 88% of those polled said they bought art from a new gallery in the past two years, and 52% bought works by new and emerging artists in 2023 and this year.

The latter data point is interesting, since works by many of these artists fall into the ultra contemporary category, where art soared to multiples of original purchase prices in a speculative frenzy from 2021-22. That bubble has burst, but the best of those artists are showing staying power, Newton says.

“You’re seeing that kind of diversion between what’s most interesting and will maintain its value over time, versus maybe what’s a little bit less interesting

and might have had speculative buying behind it,” he says.

Collectors appear better prepared to uncover the best artists, as more of those surveyed are doing background research or are seeking advice before they buy. Less than 1% of those surveyed said they buy on impulse, down from 10% a year earlier, the report said.

Not all collectors are alike so the Art Basel-UBS report goes into considerable detail breaking down preferences and actions by individuals according to the regions where they live and their age range, for instance. The lion’s share of spending on art today is by Gen X, for instance—those who are roughly 45-60 years old.

Despite a predominately optimistic view of the market, of those surveyed only 43% plan to buy more art in the next 12 months, down from more than 50% in the previous two years, the report said. Buyers in mainland China were an exception, with 70% saying they plan to buy.

Overall, more than half of all collectors surveyed across age groups and regions plan to sell, a reversal from past years. That data point could foretell a coming buyer’s market, the report said, or it “could be indicative of more hopeful forecasts on pricing or the perception that there could be better opportunities for sales in some segments in the near future than there are at present.”

In the U.S., where 48% of collectors plan to buy, Newton says he’s seeing a lot of interest in art from wealth management clients.

“They’re looking for ideas. They’re looking for names of artists that can be compelling and have staying power,” Newton says. “That’s definitely happening from an optimistic standpoint.”