Luxury property growth lags even though billionaire boom gathers pace

Billionaires with an eye on their next mansion or penthouse need not worry about tightening their sizeable belt.

According to the latest data, global luxury residential prices rose by an average of 3.2 per cent in 2025.

For the Australian billionaire cohort whose wealth is expanding at pace, and whose ranks are swelling rapidly, the pace of luxury property price growth won’t serve as a deterrent to those buying homes ranked in the top 5 per cent of properties by value.

In Australia, Perth (4.1 per cent) recorded growth in luxury residential prices above the global average, while the Gold Coast (2.8 per cent) and Brisbane (2.1 per cent) saw more modest rises, and Sydney (-0.4 per cent) and Melbourne (-1.3 per cent) saw slight falls.

That sits in contrast to the broader market narrative, where tight supply and strong population growth have driven more pronounced gains in many mid-market segments.

But those gains were dwarfed by the overall property price growth in those state capital city markets. Perth’s dwelling values soared 24.3 per cent in the past 12 months and Brisbane by 19.0 per cent. Even Sydney (4.8 per cent) and Melbourne (3.4 per cent) saw gains despite luxury market declines.

The figures reinforce the notion that the top end does not always move in lockstep with the rest of the market and in fact often lags.

Knight Frank’s latest releases lean heavily into the narrative of a surging luxury sector, underpinned by accelerating wealth creation and constrained supply. And it is true that the global pool of ultra-high-net-worth individuals (UHNWIs) continues to expand at a remarkable rate, with 89 new entrants added each day.

Australia is very much part of that story.

For those Australians confronting a cost-of-living crisis and struggling with increasing mortgage repayments, they can perhaps take comfort in knowing the number of billionaires nationally is rising rapidly.

The country ranks fourth globally for billionaire growth, with the cohort expected to expand by 77 per cent by 2031. The number of UHNWIs — those with at least US$30 million — is forecast to rise by nearly 60 per cent over the same period.

On the surface, that should be rocket fuel for the luxury property market; more wealth, more buyers, more competition.

But the price data tells a more restrained story.

Buying power shifts tell a deeper story

One of the more revealing metrics in the Knight Frank data is buying power — how much property US$1 million (A$1.4 million) can purchase.

In many global cities, that buying power has been eroded sharply over the past five years. Yet in Melbourne, it has actually improved, with buyers able to purchase 4 per cent more luxury property than they could five years ago.

That is not the hallmark of a market in full flight.

Sydney has followed the more familiar pattern, with buying power declining by 5 per cent, while Brisbane and Perth have seen reductions of 5 per cent and 11 per cent respectively. The Gold Coast has recorded the sharpest fall at 14 per cent, albeit from a position of relative value.

Taken together, these figures point to a luxury segment that remains globally competitive on price, but not necessarily one experiencing runaway growth.

Wealth rising faster than property

If there is a genuine boom underway, it is in wealth creation rather than property performance.

The pace at which new UHNWIs are being created globally is striking, and it is this expanding buyer pool that underpins much of the optimism surrounding the luxury residential sector.

However, there is a disconnect between that growth in wealth and the rate of price appreciation in luxury property.

In simple terms, wealth is rising faster than luxury real estate values.

For investors, this suggests that while demand fundamentals are strengthening, they are not yet translating into the kind of price acceleration seen in more supply-constrained, mid-market housing segments.

Ari Petrovs, Knight Frank Australia Partner, said the projected growth in Australia’s ultra-wealthy population reinforced the country’s position as a significant and rapidly growing wealth market, not just in APAC, but globally.

“Australia punches well above its weight in the global wealth landscape,” he said.

“This expansion is being driven by more than just rising asset prices.

“There is a deep economic diversification driving it, from resources and agriculture through to finance, business services and technology.

“These economic engines have created a depth of wealth that outstrips many comparable economies.

“In a world where wealth is becoming more mobile, Australia stands out for the diversity and durability of its wealth creation story.”

A more selective luxury market

The same theme of moderation and selectivity is evident in the broader luxury investment landscape.

Knight Frank’s Luxury Investment Index recorded a slight decline of 0.4 per cent in 2025, signalling a stabilisation after a period of correction. Performance varied widely across asset classes, with some segments — such as impressionist art — delivering strong gains, while others, including whisky and classic cars, declined.

The shift has been towards rarity, provenance and quality, rather than broad-based growth.

That mindset is increasingly relevant to luxury property as well. Not all prestige assets are created equal, and performance is becoming more dependent on location, uniqueness and long-term appeal.

For property investors, it is a reminder that even at the top end, fundamentals still matter.

The supply constraint remains

One area where the luxury and mainstream markets do align is supply.

Prime property remains tightly held, and new development, particularly at the high end, is constrained by planning, cost and feasibility challenges.

This limited supply is helping to support prices, even if growth remains modest.

At the same time, global uncertainty and higher borrowing costs are tempering demand, particularly in markets where leverage still plays a role.

The result is a market that is stable, supported by strong fundamentals, but far from exuberant.

John McGrath, Chief Executive of McGrath Estate Agents, Knight Frank’s partner in Australia, said Australia’s luxury residential market is in a strong position.

“Sydney continues to lead the super-prime market; it recorded the strongest quarter on record for transactions above US$10 million in late 2025, a result that reflects not just confidence but a structural reappraisal of how global capital views Australian real estate.

“For international buyers, the value proposition remains genuinely compelling.

“Price per square metre across Sydney, Melbourne and Brisbane compares favourably with London, New York, Singapore and Hong Kong, and Australia more broadly offers world-class lifestyle credentials while still trading at a meaningful discount to many of its global peers.”

Mr McGrath said Melbourne presents its own opportunity.

“A modest softening in prices over the past five years has improved buying power at the top end, making it one of the more attractive entry points into a global-tier city at this moment.

“Looking ahead, the demand dynamics only strengthen.

“With the billionaire cohort rising by 77 per cent, which represents a significantly deepening pool of buyers in a market where prime stock is already in short supply.”

Geelong joins the global luxury conversation

Perhaps the most unexpected inclusion in Knight Frank’s analysis is the Geelong waterfront, which has been named among a group of global luxury hotspots tipped for outperformance.

It is in rarefied company.

Alongside Geelong sit locations such as St-Martin-de-Belleville in the French Alps, Lake Como in Italy, and Pacific Palisades in Los Angeles, markets long associated with international wealth and prestige.

Geelong’s inclusion speaks to a broader shift in buyer preferences. Lifestyle, accessibility and relative value are increasingly driving demand, particularly among domestic high-net-worth buyers.

Located around 75 kilometres from Melbourne, the waterfront precinct combines coastal amenity with proximity to a major capital city, supported by ongoing infrastructure investment and a growing cultural and lifestyle offering.

Price points, while elevated in a local context, remain accessible relative to global luxury benchmarks. Two-bedroom waterfront apartments start from around US$1.5 million, while premium homes exceed US$2 million.

Over the past five years, apartment values in the area have risen by around 31 per cent, reflecting growing demand and a shift towards more sophisticated, design-led developments.

For investors, Geelong highlights an important trend: luxury demand is not confined to traditional blue-chip global cities. Emerging lifestyle markets, particularly those offering a balance of amenity, accessibility and relative affordability, are increasingly attracting attention.

Whether Geelong ultimately performs alongside its international peers remains to be seen. But its inclusion alone signals how the definition of a ‘luxury market’ is evolving.