Want to be among Australia's wealthiest 1 per cent? There's good news and bad news

If you want to be among the top 1 percenters in Australia in terms of wealth, there’s good news and bad news.

The good news is it has become easier to get into the top 1 per cent wealthy club in Australia.

The bad news is you’ll still need to rustle up $7.17 million.

But that’s still a couple of decades of the average salary less than it was two affluent years ago. In 2022, a bank balance of $8.45 million was needed to be in such exalted mansion, yacht and caviar company.

Australia now ranks seventh in the world for the money required to be in the top 1 per cent of wealthiest people, falling from its ranking of third last year.

Luxury property continues to deliver sizeable gains to those fortunate enough to own one.

When it comes to luxury residential property, sellers – who are hard to find in this market - are getting slightly more bang for their buck in Sydney and the Gold Coast.

Knight Frank’s The Wealth Report 2024 found US$1 million (A$1,536,000) bought a little less space in 2023 than 2022 due to price growth.

In Sydney, US$1 million bought 43sq m of luxury space in 2023, slightly less than the 44sq m in 2022. Meanwhile, on the Gold Coast you’ll get 112sq m for $US1 million, compared to 117sq m in 2022.

Despite this, these Australian cities are still much more affordable for luxury property than other markets around the world, such as Monaco, where the elite will only get 16sq m for US$1 million and Aspen, Colorado, where US$1 million will buy just 20sq m.

Luxury residential property rose by 3.1 per cent across 100 selected locations around the world.

Australia punches above its population on the world stage when it comes to being a property investment target for the ultra-wealthy.

According to Knight Frank’s Attitudes Survey, Australia ranks fourth as a location to purchase a new home, with 5.6 per cent saying the most likely location they would buy is in Australia if they were planning to purchase a new home. Australia sits behind the UK (17.7 per cent), the US (9.8 per cent) and France (7.2 per cent)

Perth and the Gold Coast recorded growth higher than the global average.

Perth recorded the highest residential price growth out of the Australian cities, with a 5.2 per cent rise over the year, and sitting at number 28 out of 100 city, sun and ski locations globally, according to Knight Frank’s Prime International Residential Index (PIRI 100).

The Gold Coast came in second out of the Australian cities with 4.1 per cent growth and in 38th place globally, equal with Stockholm. Sydney came in in 49th place, equal with Barcelona, with growth of 2.7 per cent, followed by Brisbane in 58th place, with growth of 2.3 per cent and Melbourne in equal 63rd place, with growth of 1.4 per cent.

Sun shining on Tasmania

The rich appear keener to chase a sun tan than a ski slope.

Sun locations continue to outperform city and ski markets, up 4.7 per cent on average. Ski resorts are close behind (3.3 per cent) and prime prices in the city markets tracked have risen 2.7 per cent on average.

Kate Everett-Allen, Head of International Residential and Country Research at Knight Frank, said at the start of 2023 economists were expecting a much weaker outcome across global residential property markets but that didn’t transpire.

“Stock markets were heading for more pain, inflation was veering out of control and the pandemic-fuelled property boom was set to end in tears as borrowing costs hit 15-year highs in some markets, however, that never happened – we’ve seen a much softer landing in terms of price performance around the world.”

Tasmania’s property market has been in the doldrums for a couple of years after a period of rapid capital growth but it’s still on the radar of the wealthy.

When asked to pick the property types and locations set to attract wealthy buyers in 2024, Knight Frank’s Michelle Ciesielski, Head of Residential Research, Australia, identified wilderness retreats in Tasmania.

“Prime property values along Hobart’s Derwent River are up 142 per cent over the past decade, although the city still offers great value, with prestige homes starting from A$1.2 million.

“Those seeking a better work-life balance and less exposure to climate risk are attracted by the opportunity to design a modern, sustainable home.”

Luxury apartment developments in investors’ sights

Australia’s lack of super prime luxury apartments was also seen as an opportunity for ultra-high net worth individuals (UHNWIs, or someone with a net worth of US$30 million or more) to add even more to their bank balance.

Erin van Tuil, Partner, Head of Residential for Knight Frank said the global elite could make more private jet-funding money by funnelling funds into high-end accommodation developments.

“The success of Crown Residences at One Barangaroo, Australia’s first fully integrated hospitality branded residences, made it clear that service provision is still an aspect of apartment living that is yet to be fully harnessed by Australian developers.

“I see a strong opportunity for forward-thinking developers and luxury hoteliers to expand into this sector to deliver more hospitality branded residences.

“Crown Residences at One Barangaroo is the only truly super prime building in Sydney, if not Australia, so when you consider that alongside the considerable growth in Australian UHNWIs we’re likely to see over the coming years, super-prime developments that offer exceptional design, location and service, albeit perhaps not linked to a hotel brand, would also be a sector I expect will perform strongly.”