Smaller cities lead luxury price growth

Price growth for luxury properties in Perth, Gold Coast and Brisbane outpaced the bigger cities in 2020, with demand for prestige homes continuing to be boosted by the return of expats.

Knight Frank’s latest look at luxury residential prices across the world’s top 100 residential markets showed five Australian cities were ranked in the top 65 for price growth globally.

Perth was Australia’s top ranked location, coming in at 34 with 3.6 per cent annual growth at the top end of the market, a big jump from the 0.9 per cent price growth recorded in 2019.

Gold Coast was ranked 36th with annual growth of 3.2 per cent, followed by Brisbane at 44, with 2.5 per cent growth.

Sydney was ranked 56th with 1.1 per cent growth, while Melbourne was equal 63rd, at 0.9 per cent.

“While Perth was Australia’s frontrunner for luxury residential price growth over 2020, Sydney recorded its highest volume of prime sales ever in the third quarter of last year and preliminary data is indicating the fourth quarter surpassed this,” Knight Frank head of Australian research Michelle Ciesielski said.

Knight Frank national head of residential Shayne Harris said he expected demand for Australian luxury homes to remain strong as the pandemic continued to rage in other countries, sending expats home.

“On average, 22 per cent of the wealth of Australian ultra-high-net-worth individuals is directly allocated to property for their principal and second homes where they and their families spend time, while on average 24 per cent is directly allocated to a property investment portfolio,” Mr Harris said. 

“The Knight Frank Attitudes Survey found that 15 per cent of Australian ultra-high-net-worths bought a new home in 2020, and 16 per cent plan to buy one this year.

“Australia’s ultra-wealthy* are most likely to buy a new home locally, followed by purchasing a second home in the US, New Zealand, the UK then Israel, while ultra-high-net-worths from overseas list Australia as a number three destination behind the UK and the US.

“The attributes listed as most important for Australian ultra-high-net-worths purchasing a new home in 2021 include outdoor space and leisure facilities or amenities.”

Mr Harris said Perth’s strong rebound followed several years of price decline and was boosted by recent population growth.

“This rebound is across both the mainstream and luxury market, and with Perth being Australia’s fourth largest city, we believe it is undervalued for its population and growth will continue to be significant,” he said.

“The pandemic has forced many to retreat in the comfort of their home for the best part of 2020, so it’s not surprising prime property is becoming increasingly more attractive in destinations known for their lifestyles such as Perth, the Gold Coast and Brisbane.

“In Sydney, it’s the super-prime property market - those sales exceeding $10 million - which is driving up the overall prime performance as we see our ultra-wealthy clients upgrading the family’s main residence and a buying new holiday homes as international travel is likely to remain subdued in the coming years.”