Sales from Bermuda's luxury homes market proved to be lacklustre with house values below average for the first half of 2008, according to Coldwell Banker Bermuda Realty.

The Luxury Home Market Update by Coldwell Banker's president Brian Madeiros revealed the findings were in stark contrast to the opening six months of last year.

But the real estate company's market intelligence indicates that more than $25 million worth of luxury homes are currently under contract and may close by the end of the year.

The trend of total luxury property sales peaked in 1998 above $80 million, before returning to a similar level three years ago, but then dropping for the first half of this year at just below $20 million, one of the lowest figures over the past 12 years.

"Increasingly globalised markets mean that legislation and economic performance abroad can have as much impact as local policies," said Mr. Madeiros.

"Even in the face of potentially harmful global development, Coldwell Banker Bermuda Realty's luxury home agents report noticeable demand from high net-worth international buyers.

"This demand was most pronounced in February and March with a spike in interest in large estate homes listed at more than $12 million."

Mr. Madeiros said most of the international demand for luxury homes in Bermuda was coming from buyers in the US and Canada, showing that despite a decline in the broader US housing market, sales of high-end homes in desirable neighbourhoods remained strong, thus explaining their interest in the Island's luxury homes market.

He pointed out the impact of macro-economic changes on Bermuda's economy, such as the reassessment of the UK non-domicile residents tax rules by the Chancellor of the Exchequer Alistair Darling earlier this year, resulting in a reported increase in the number of enquiries from affected wealthy individuals living in the UK.

Meanwhile recent tax changes in Bermuda have had little effect on luxury home sales, with demand from non-Bermudians remaining steady, despite increased licence fees for the sale of land which came into effect at the start of April (from 22 to 25 percent for stand-alone homes and from 15 to 18 percent for condominiums).