Price premium grows for waterfront homes

The price gap between prime waterfront properties and inland prestige homes is growing, with Australia’s major cities all recording an uptick in their waterfront premium in 2020.

Knight Frank’s Australian Prime Waterfront Index showed luxury property with a waterfront location was worth 69 per cent more than inland counterparts across Australia, with Sydney laying claim to the biggest premium, of 104.7 per cent.

Gold Coast had the next biggest price gap, at 68 per cent, followed by Perth at 61 per cent, Brisbane at 45 per cent and Melbourne at 30 per cent.

“Melbourne saw a rise in its waterfront premium of just over three per cent, with the city recovering back to Q3 2018 levels, as residents recoup from a lengthy pandemic lockdown where waterfront properties are  increasingly likely to become a more desirable setting to spend time at home,” Knight Frank head of residential research Michelle Ciesielski said.

“Prime residential markets in Brisbane and the Gold Coast have been widely performing well as popular with both relocating interstate families and downsizers.

“Although many of these budgets would allow for the price point of a waterfront property in these cities, buyers took a more conservative approach in 2020 to record only a slight rise in premium for a waterfront property on the Gold Coast of one per cent and two per cent on the Brisbane River.”

The research showed harbourfront properties commanded the highest premium, followed by coastal frontage, riverfront properties and canal homes.

Direct access to water and maritime facilities are a premium many buyers are willing to pay for, with the COVID-19 pandemic amplifying that privilege.

Analysis of absolute waterfront prestige property sales in the past 12 months showed 39 per cent had maritime facilities, with one in four having a jetty, one in five a pontoon, while 15 per cent had a mooring and 7 per cent had a slipway.

Knight Frank’s Head of Residential in Australia Shayne Harris said of the total number of super prime sales in Australia in the year ending Q3 2020, absolute waterfront sales made up 33 per cent. 

“Although this share of sales fell from 36 per cent in Q3 2019, the number of sales grew from 40 to 46, demonstrating the strength of the wider super-prime luxury market,” Mr Harris said.

“The distribution of waterfront sales varied, with harbourfront holding the most share with a little over half, while coastal and river frontages had one-fifth of sales each and properties with canal frontages accounted for nine per cent of sales.

“Over the past five years, the average super-prime waterfront sale price has shifted higher by 43 per cent.”

Knight Frank defines prime property as the top 5 per cent of each market by value, with super prime sales having a minimum of a $10 million price tag in Sydney and Melbourne, and all other cities having a minimum price of $7 million.