Positive signs for prestige market: New report predicts a bright 2019 for top end

Australia’s prestige property prices will rise slightly over 2019, underpinned by an expected 9 per cent growth in the high-net-worth population, a new Knight Frank report into the global prime market predicts.

That, the report says, will translate into an increase of 2 per cent in Sydney by the end of this year, down 2 per cent on last year’s 4 per cent growth, and one per cent in Melbourne, down from 2018’s 2.8 per cent.

The increase will be 3 per cent in Brisbane compared to 3.5 per cent in 2018 and 2 per cent in Perth – the same as last year.

“The prestige market hasn’t been impacted by wage pressures and tightened lending from the financial institutions as have the other markets,” says Knight Frank’s head of residential research Australia Michelle Ciesielski on releasing the company’s Global Prime Forecast 2019 report.

“The local economies are reasonably strong and we’re seeing a lot of expats returning to buy with foreign currency, which are both having a favourable effect on the prestige markets.

“Brisbane is also benefitting from people priced out of the Sydney market in particular, looking for more value for money, and we’re seeing a more ‘normalised’ market now,” Ciesielski says.

Not everyone agrees, however.

AMP Capital chief economist Dr Shane Oliver says he believes cautious buyers, vendors revising their expectations, less foreign capital and a softening share market could actually lead to price falls of between 7 and 8 per cent in Sydney and Melbourne.

“My view is that the top of the market could slide with prices coming off in 2019, although that sector is lumpier with some areas doing better and some worse,” he says.

“But other areas like Brisbane, Adelaide and Canberra, which aren’t so affected by foreign buying, could do better, with modest gains, and Perth showing a bounce-back. For all areas, 2020 will probably be a better year.”

Considering how much prestige prices have risen over the past four years, a fall-off now of, say, 5 per cent in Sydney and Melbourne is little more than a correction, says NAB chief economist Alan Oster.

“Providing it’s an orderly adjustment, then that isn’t such a big issue. It’s not a bad time to have that either, especially when the global economy and the local economies are strong, and interest rates and unemployment are low,” he says.

The upside is that a softening at the top end is good news for upgraders anyway, suggests BIS Oxford Economics business research and forecasters senior manager residential Angie Zigomanis.

“If prices are getting softer, and people either have the cash or can get the finance, any fall-away at the top narrows the gap between what people have and what they’d like.”

The prestige market in Melbourne will be slower over 2019 than in Sydney, believes Domain data scientist Dr Nicola Powell.

She says some sought-after prestige areas of Sydney, particularly along the waterfront, always show strong demand with limited supply, and they will fare better than properties at lower price points.

“In Melbourne, the upper end of the market is feeling the brunt of the downturn, at the same time as the lower end will show price growth,” she says. “We’ll see those weaknesses continue into the year, but conditions won’t change dramatically in 2019, and both buyers and vendors will adjust their expectations.”

Three outstanding prestige homes

Point Piper

Durbach Block Architects’ innovative design for this waterfront home, defined by its curved rectangular shape and soaring ceilings, claimed the Robin Boyd Award for residential architecture in 2004.

“There are a limited number of homes of this calibre, as well as in Point Piper, and there’s a lot of demand,” says selling agent Michael Pallier, of Sydney Sotheby’s International Realty.

Pallier is seeking offers of about $18 million through an expressions of interest campaign.

Yeronga

Concrete, steel and glass form the palette for this sleek three-level property, where design highlights include frameless sliding doors, whole-wall windows and an impressive granite kitchen.

An internal lift services the house and, on the ground floor, you’ll find a gym, wine cellar, workshop and eight-car garage.

The Brisbane River-fronted listing is with Sarah Hackett of Place Estate Agents Bulimba.

Bicton

Architecturally designed to be a Perth family’s dream home, this expansive five-bedder has over 1000 square-metres of meticulously and thoughtfully planned space.

High-end and high-tech elements include keypad entry and remote door opening, a luxurious main bedroom with underfloor heating and a spa bath, and thermal heating for when the weather cools.

You can expect to pay in the high $5 million bracket through Toby Astill of Space Realty.