John McGrath – Four Australian cities among world’s top prestige markets for growth
Australian prestige property has gained incredible new value, with a shortage of homes for sale and strong demand from upgrading locals and returning expats pushing luxury home prices skyward.
In the recent 2022 Wealth Report by independent global property consultancy Knight Frank, four Australian cities were among the world’s top 100 prestige markets in 2021 for growth.
The Gold Coast did best, ranked No. 12 in the world with home values up 17.1% in just 12 months. That’s more growth than the preceding four years combined.
Sydney experienced price gains of 16.2% and was ranked No. 17. Brisbane (No. 29), Perth (No. 31) and Melbourne (No. 40) followed with gains of 11.2%, 10.5% and 9.4% respectively.
These gains have largely been driven by upgrading locals, returning expats (particularly in Sydney and Melbourne), and the seachange/treechange trend brought about by the pandemic.
Amongst Australian cities, two of the biggest beneficiaries of the seachange trend have been the Gold Coast and Sunshine Coast, with many wealthy buyers from the southern states either relocating or buying second homes there.
The desire to upgrade has increased the demand for larger family compounds with water frontage or water views, a large block and recreational facilities like a pool, tennis court, boat mooring, home cinema and other features that provide a better lifestyle at home.
One of the challenges for prestige buyers in recent times has been a lack of supply of homes for sale.
This has intensified competition for the best homes and created new records not just in traditional prestige markets, like those along Sydney Harbour, but also in suburban waterfront districts. An example is the Sutherland Shire in Sydney, which recorded its first $20 million sale in May.
One of the reasons for the supply shortage is that many would-be downsizers can’t find a suitable apartment or smaller home in the same area.
Many are giving up the search and undertaking major renovations, including installing internal lifts, so they can stay in their houses longer as they age.
According to Knight Frank’s 2000 Rightsizing report, this is a global phenomenon. Supply chain issues are resulting in delayed construction of luxury apartments to meet rising downsizer demand. This is particularly impactful in countries with an ageing population, like Australia.
According to the latest suburb data from CoreLogic, these are the top two suburbs for house price growth in each capital city along the Eastern Seaboard over the 12 months to March 31, 2022.
Top 2 Prestige Growth Suburbs
- Palm Beach 63% to a median $5.9 million
- Dover Heights 54% to a median $6.5 million
- Canterbury 27% to a median $3.6 million
- Balwyn 17% to a median $2.8 million
- Hamilton 29% to a median $2 million
- Ascot 27% to a median $2.1 million
- Red Hill 51% to a median $2.4 million
- Yarralumla 41% to a median $2.3 million
- Tranmere 57% to a median $1.2 million
- Sandy Bay 30% to a median $1.4 million
Source: Market Trends, 12 months to March 31, 2022, published by CoreLogic. Prestige markets defined as suburbs with median house prices above $5 million in Sydney, above $2.5 million in Melbourne, above $2 million in Brisbane and Canberra, above $1.2 million in Hobart. Suburbs with fewer than 20 sales per annum excluded.
The pandemic has also led to capital city affluence permeating the regions on a scale we have never seen before. New demand has pushed regional homes values at all price points to new highs.
In Queensland, the gap between the median house price in Brisbane and the Gold Coast and Sunshine Coast has widened during the pandemic, with the capital city about $200,000 cheaper.
In NSW, Byron Bay on the NSW North Coast now has a higher median house price than Sydney.
The Knight Frank Report rates Byron Bay as one of the world’s best areas to live in for health and wellbeing.
In an analysis of global prestige neighbourhoods offering the healthiest lifestyles and strong capital growth prospects, they rated Byron alongside Como in Lombardy, Italy, Queenstown in New Zealand; Natai Beach in Phuket, Thailand; and Naples in Florida, in the US.
They cited Byron Bay’s beautiful natural environment, recreational activities, limited property development and “recent influx of city-dwellers switching to hybrid work styles” among the reasons.
According to the report: “Byron Bay’s environmentally minded council has limited the number of new homes built over the past few decades, meaning that the pace of development has been more measured than in other tourist towns.”
According to the report, Australia was the third most popular country in the world for home purchases by new ultra-high net worth individuals (UHNWI) in 2021.
About 45% of the world’s newly ultra-rich bought in the US, 36% in the UK and 13% in Australia.