From Perth to Sydney, luxury property market thriving

Interest rate rises are dampening the property market among the masses but for the elite, prices are being pushed ever higher for luxurious prime and super prime homes.

Luxury apartment and pool in South Perth.
Luxury property markets, such as this apartment in South Perth, are experiencing significant price growth in a supply-limited market. (Image source:

Australia’s 34,000-kilometre coastline is host to some of the world’s most prestigious waterfront properties and, unaffected by trifling matters such interest rates, real estate prices are booming.

With the nation’s wealthy segment of the population predicted to increase and cashed-up foreign investors returning, low supply is buoying prices and pointing to smooth sailing ahead for the ultra-luxury property market.

In Sydney’s case, it has just acquired membership to an exclusive 12-city super-prime property market club.

The release of the Knight-Frank Global Super-Prime Intelligence report put the NSW capital ahead of Geneva, Orange County in southern California and Paris, for its sales above A$14.5 million.

Though premium market Indicators in Perth and the Gold Coast may not have ranked alongside the leaders Dubai, Hong Kong, New York and Los Angeles, they’re also seeing a positive ripple effect to match the 11 per cent super-prime property price increases in Q1 2023 globally.

Super-prime residential property is typically defined as the top 5 per cent of the most valuable homes in a geographical area or postcode.

Erin van Tull, Head of Residential, Knight Frank

Erin van Tull, Head of Residential, Knight Frank

Erin van Tuil, Head of Residential, Knight Frank, said international buyers in Sydney were key drivers in the Harbour City’s super-prime sales.

“Unlike the US, Singapore, and UK, international buyers have been slower to return to Australia’s prestige residential market since borders reopened but we have seen enquiries from international buyers intensify over the past few months, and this is likely to ramp up further as we move into the spring and summer months.

“When reviewing international ownership of prime luxury homes in Australia, US ownership comes in behind the UK and is then followed by Singapore and mainland China,” Ms van Tuil said.

Australia is currently experiencing limited supply and strong demand from high-net-worth individuals seeking a safe harbour from inflation and stock market volatility.

Additionally, the recent lifting of more stringent and longstanding pandemic restrictions in Asia-Pacific countries including Hong Kong, Singapore, Thailand, and China, has created a flood of new interest from international buyers.

The recent lifting of pandemic restrictions in Asia-Pacific countries, including China, Hong Kong, Singapore, and Thailand has also created a flood of new interest from international buyers.

Sydney luxury houses breaking records

Price growth for Sydney’s most expensive suburbs over the past three months measured 5.6 per cent, which is much stronger than lower quartile values that have risen just 2.6 per cent, according to CoreLogic’s Executive Research Director Asia-Pacific, Tim Lawless.

“Although values across more expensive homes are rising more rapidly, at the end of May dwelling values across Sydney’s upper quartile remained 11.8 per cent below the January 2022 peak, equivalent to a saving of around $213,000 from the cyclical high,” he said.

Still, the limited super-prime sector settled 76 sales over the past 12 months at a combined value of $1.8 billion and median price of $16.2 million, representing a faster rise in sales than Los Angeles which is currently fourth globally.

Darren Curtis, owner of Christies International Real Estate in Sydney, recently sold a waterfront property for $13.5 million, setting a sales record in the Sydney’s Greenwich, as well as an $11.5 million, 4.5-hectare estate just outside Sydney.

Darren Curtis, Owner, Christies International Real Estate Sydney

Darren Curtis, Owner, Christies International Real Estate Sydney

“Luxury real estate in Australia is a relative bargain compared to Hong Kong and Singapore, as well as global centres such as London, Paris, New York and Los Angeles, so the top end of our market is perceived to be undervalued compared to many other countries, making Australia very attractive to outside buyers,” Mr Curtis said.

Double Bay Principal of luxury realtors Pillinger, Brad Pillinger, said the return of foreign buyers and the forecast that Australia’s ultra-high net worth individual (UHNWI) population will grow 31 per cent over the next five years will increase demand for homes worth more than $10 million.

“No matter what happens in the economy, there’s still only about 200 houses on the waterfront between the Sydney CBD and Watsons Bay, and only ever a few that are genuinely for sale at any given time.

As more buyers enter the market, those houses will increasingly become sought-after and more expensive,” Mr Pillinger said.

His report cites the top five recorded sales in Sydney for 2022 as being in Vaucluse ($62 million), Darling Point ($60 million), Point Piper ($45 million), Woollahra ($35 million) and Mosman ($33 million).

The top five prestige property suburbs in terms of median house price are Bellevue Hill and Vaucluse ($8.5 million), Darling Point ($6.8 million), Tamarama ($6.2 million), Dover Heights ($5.9 million), and for apartments, Point Piper ($4.7 million), Darling Point ($2.6M), Tamarama ($2.5 million), Bellevue Hill and Clovelly ($1.6 million).

Rich or poor, rents soar

Sydney has also risen from sixth to third place in Knight Frank’s Prime Global Rental Index (PGRI) Q1 2023, which tracks the movement in luxury residential rents across 10 global cities worldwide.

It found Sydney rents for prime property rose by 11.7 per cent over the 12 months until the end of Q1 2023 and 5.3 per cent over the first quarter of this year.

In 2022, it ranked sixth behind Singapore, New York, London, Toronto, and Tokyo but is now hot on the heels of Singapore and London.

“We are seeing this imbalance between demand and supply in both affordable and luxury residential market, with very low vacancy rates, hence why Sydney prime residential rents have experienced strong growth over the past 12 months and total residential rental vacancy was 1.3 per cent at the end of March across Greater Sydney,” Ms van Tuil said.

“The major factors driving the strong growth in prime rents in Sydney are returning expats needing accommodation, as well as a rise in corporate rentals for new talent hires from outside Sydney, plus construction delays due to labour and materials shortages are also contributing as tenants are forced to rent for longer while their new builds or renovations are being completed.

“We are also seeing a rise in film production crews looking to secure prime rental properties for extended periods, with short-stay nightly hotel rates having become increasingly more expensive and accommodation harder to find as business travel ramps up.

“With housing construction volumes remaining low amid issues faced by the construction sector and fewer developers building product suitable for investors due to a focus on owner occupiers, rents in Sydney’s prime residential market are expected to continue to rise well above trend through 2023,” Ms van Tuil said.

Gold Coast booms on rising migration

Supply is also impacting new developments on the Gold Coast as Barry Teeling, Development Director, Mulpha Developments, explained to API Magazine, there are approved luxury developments in the market that are unlikely to be delivered as most developers can’t get contractors to quote, let alone build, despite high demand.

“There is a huge demand for luxury product, particularly luxury waterfront apartments and land but there is a real scarcity of luxury apartments in prestige locations such as Hope Island, including Sanctuary Cove, and not only is there an influx of people in this market moving to the Gold Coast from cities such as Sydney and Melbourne looking for luxury properties, there are also many high-net-worth families who have already been living in large luxury homes and are now wanting to downsize without compromise.”

Barry Teeling, Development Director, Mulpha Developments

Barry Teeling, Development Director, Mulpha Developments

Mr Teeling oversees the management of the region’s largest prestige master-planned development, Sanctuary Cove, where he says 70 per cent of sales in a location known as Harbour One have come from people already living at Sanctuary Cove because they do not want to leave the precinct but want a lower maintenance secure lifestyle.

“The relative value here is unbelievable compared to Sydney and Melbourne for similar product and is less than half the dollar-per-square-metre rate in similar prestigious locations, plus our demographic has diverse needs so we’re serving high-net-worth downsizers, young families looking for a safe and convenient luxury home, retirees looking for the ultimate lifestyle offering, as well as international entrepreneurs and business leaders who travel extensively and want a home that is safe, secure and convenient and offers a lifestyle focused on health, wellness and relaxation,” Mr Teeling said.

While Sanctuary Cove’s recycled sales top $40 million plus a month, he says Burleigh Heads is another region performing well.

Perth waterfront properties in hot demand

Climate and water views are key selling points in Western Australia, where Perth luxury real estate agent Meryl Carter told API Magazine it’s a great time to buy luxury property there.

“Property prices continue to climb in Perth’s luxury market and more than units or apartments, houses are performing best particularly anything located on the water and there’s an added incentive that Perth is less expensive than the Eastern states.”

Supply, however, keeps the market tight for buyers who Ms Carter described as a combination of local, interstate and international.

She added that sellers seem reluctant to offload property now due to the lack of alternative properties to buy.

Wealthy untouched by economic headwinds

Despite global economic headwinds, super-prime and prestige residential property has retained its attraction for wealthy buyers, but limited stock availability is holding back transactions in recent months, Knight Frank Head of Residential Research in Australia, Michelle Ciesielski, said.

“The data for the first quarter of this year confirms an ongoing desire for new $10 million-plus purchases at a time when markets were clouded by peak uncertainty around global inflation and interest rates.

“These factors are less likely to impact upon buyers of super-prime property because they tend to be cash buyers, but it does have an impact on sentiment.

“Our expectation is that 2023 will see more subdued conditions compared to the recent 2021 peak, with global transactions likely to total $25-27 billion for the full year.

“However, the recovery in growth in the global economy later this year will aid transactions in 2024, with a return to $30 billion-plus sales,” Ms Ciesielski said.

Article Q&A

Which are the most expensive suburbs to buy property in Sydney?

The top five prestige property suburbs in terms of median house price are Bellevue Hill and Vaucluse ($8.5 million), Darling Point ($6.8 million), Tamarama ($6.2 million), Dover Heights ($5.9 million), and for apartments, Point Piper ($4.7 million), Darling Point ($2.6M), Tamarama ($2.5 million), Bellevue Hill and Clovelly ($1.6 million).

Are luxury property prices going up or down?

With Australia’s wealthy segment of the population predicted to increase and cashed-up foreign investors returning, low supply is buoying prices and pointing to smooth sailing ahead for the ultra-luxury market.

Where are the most expensive places in the world to rent luxury property?

Knight Frank’s Prime Global Rental Index ranks the most expensive luxury rental markets in the world as being Singapore, London and Sydney.

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