Champagne corks still popping at top end of property market
Over the past 12 months, the median price of the top one per cent of properties sold has increased by 10 per cent, easily outperforming the rest of the market.
Depending on which coast of Australia you were on during the 2020-22 pandemic property boom, luxury house prices heralded prosperity like the pop of a very expensive bottle of champagne.
West or east of the country, luxury housing has paid very palatable dividends and, perhaps unexpectedly, taken luxury apartments to the next level.
In Sydney the world’s, most expensive streets boast median house prices like the $20.7 million Kambala Road, Bellevue Hill or, as the case is on Stanley Avenue in Mosman, a $33 million median house price.
Pandemic or not, these kinds of dollars are synonymous with the NSW capital, but the pandemic years sent luxury markets in other cities and the regions into overdrive as well.
The Ray White Now September 2022 property market report shows that for apartments, Floreat tops the list with a median of $1.1 million while Eagle Bay, near Dunsborough, is regional Western Australia’s most expensive and one of Australia’s most expensive regional locations. Median prices for houses in Eagle Bay have risen from $1.2 million to $2.2 million in just two years.
“While high-end sales didn’t do particularly well in 2018 and 2019, this had completely turned around by 2020,” Ray White’s Chief Economist, Nerida Conisbee, said.
“Over the past 12 months, the median price of the top one per cent of properties sold has increased by 10 per cent, easily outperforming the rest of the market.
“It seems the pandemic was an ideal time for many people to buy a luxury home and although homes sold at very high price points were partly lifted by extreme price growth, we did see record numbers of houses sold above $10 million.
“An increase in luxury homes wasn’t just restricted to houses, with the number of apartments priced above $3 million also hitting record highs,” Ms Conisbee said.
Queensland luxury apartments
Henzell Property Group managing director Mclean Henzell, on Queensland’s Sunshine Coast, said off-the-plan sales had been incredibly strong in the Pelican Waters residential project Comino, with sales topping $25 million just weeks after its launch.
Comino penthouse-appointed apartments range in price from $1.4 million to $5.3 million and in size from 197sq metres up to 511sq metres for the grand penthouse.
“Previously the highest apartment price was just under $2 million but luxury unit sales off-the-plan have been in high demand with very limited competing stock,” Mr Henzell said.
“The region has seen values potentially double in some areas since 2020, with the luxury market leading the charge with huge records broken, especially in areas like Noosa,” Mr Henzell said.
Pelican Waters broke the $5 million mark for a house sale in 2022, while the southern end of the coast at Caloundra has also shown significant growth.
One demographic driving up the Sunshine Coast apartment prices are retirees who’ve sold their family home and, with a much larger budget to spend, are moving into apartments.
“We’re seeing a trend in ‘cross-sizing’ where people are moving from homes into house-sized, high-quality apartments, which are low-maintenance and offer resort-style amenity, a connection to the water and an easy lifestyle,” Mr Henzell said.
“That reinforces the strong demand for premium residential property on the southern Sunshine Coast and is driven particularly by locals who know and love the area.”
Between 2020 and 2022, the Sunshine Coast also saw an influx of interstate migration looking for a more affordable sea change, than that of Sydney.
“I can’t think of any part of the Sunshine Coast region that hasn’t done well over the last two years,” Mr Henzell said.
On the West coast, Mack Hall Real Estate principal Mack Hall can say the same.
“We’re currently involved in the marketing of four luxury apartments on Broome Street, Cottesloe, which are setting a new record,” he told Australian Property Investor Magazine.
“They took about 18 months to sell.
“We got a couple away quite early and they were $6 million per unit, which at $29,000 per square metre was a Perth record.
“We had them all sold by the middle of this year and it is due to be completed in November and now there are people who want to pay more to the current owners to walk away from the deal and they’ll pay more for them, which all goes to show there’s a lot of strength in the luxury market in Perth.”
Unlike the east coast, the Perth luxury market has seen a return to its former glory rather than an explosion of price hikes.
“We went through a very stagnant period when the GST hit and there was a serious correction in values, then it trickled along and then there was a slow trickle backwards right up to Covid.
“It might have only been 1 or 2 per cent per year, but it definitely was not going up.
“What we’ve found in some of the traditional areas is that prices are getting back to where they were in 2006, 2007.
“One of the areas we’ve had incredible success with, is apartments.
“In previous eras, people who’d bought off-the-plan were suffering low rents and a retreat of prices because there was so much new inventory coming on.
“There’s certainly no inventory coming on anymore and the rents have gone up 30 per cent.
“We’ve got zero vacancy in our property managements and we’ve found lots of buyers in the second hand unit market and that’s recovered quite a bit.”
Mr Hall feels despite current challenges there is still plenty of scope in the Perth luxury market.
“I still think that if you’ve got something that really is top quality, you’ve got buyers for it.
“That’s particularly evident where people are reluctant to build, because of some of the problems there. So, at the top end, location and the actual improvement themselves, are in demand and there are plenty of buyers around.
“What surprised me during the Covid period were the number of people who were prepared to buy $4- and $5-million-dollar beach houses who wouldn’t touch them before that, and these were people that had the money.
“I think with the demographic who might be from 45 to 65 who’ve made good money in the the stock market and mining and IT, they’re wanting something really good - they like the Perth environment and they’re prepared to pay for it, so I still think the luxury end has got strength.
Proximity to Asia
The number of ultra-high-net-worth individuals in Perth rose by 10.5 per cent in 2021, and is expected to grow by another 23 per cent by 2026 to reach 2,408 from the current 1,961, according to the Knight Frank Wealth Report released in May 2022.
“We’ve always had a traditional market all the way through Indonesia, Singapore, Malaysia, and a bit less so in Japan and Hong Kong,” Mr Hall said.
“What we’re finding with our connections now, through the Knight Frank Group, is that there’s an incredible amount of new interest and enquiry coming from that area.
“It hasn’t translated into sales but certainly the levels of enquiry are amazing for our customer base,” Mr Hall said.
Victoria Garrett, Knight Frank’s Head of Residential Asia Pacific, said clients across south-east Asia find the Perth prime luxury price point attractive over other Australian cities.
“It’s a short flight home and within the same time zone, making it easier to do business.
“Due to the Australian foreign investment framework, our non-resident clients are restricted to buying new homes and there simply hasn’t been enough built in Perth’s prestige locations in recent years.
“With more apartment projects earmarked with high-end luxury amenities, this will be attractive not only to international buyers but those domiciled in Perth, as travel is again on the agenda – and they can easily lock-up-and-leave,” Ms Garrett said.