Sydney, Melbourne prestige property prices among most rapidly growing worldwide: Knight Frank

Luxury properties in Sydney and Melbourne recorded some of the biggest price growth in the world over the past decade, new research has found. And prices are tipped to rise even further next year as the ultra-wealthy population climbs.

Prestige property prices jumped 69.8 per cent in Sydney over the past decade, and 64.1 per cent in Melbourne, outpacing growth in cities like Hong Kong, Singapore, London and New York, a new Knight Frank report shows.

Prices in Sydney are expected to rise a further 4 per cent in 2020, while Melbourne’s prestige market is tipped to jump 3 per cent, according to the Prime Global Forecast report – which was topped by Paris with 7 per cent projected price growth.

“The pipeline of new Sydney prime residential properties suitable for the ultra-wealthy population continues to be undersupplied, with some [residential projects] delayed or converted to another use,” said Michelle Ciesielski, partner and head of residential research at Knight Frank Australia.

Melbourne, by comparison, has had a number of prime luxury projects entering the market increasing competition at the top-end, Ms Ciesielski said. However, this had been matched by ultra-wealthy population growth, which is expected to increase by 21 per cent to 625 individuals by 2023.

Sydney’s ultra-wealthy population – those with more than US$30 million of wealth outside their primary residence – is also expected to increase by more than 20 per cent, exceeding 10,000 people in 2023, Ms Ciesielski said.

Elsewhere in the world, prices are expected to jump 5 per cent in Berlin and Miami, 4 per cent in Geneva and 3 per cent in Madrid and Singapore, after price growth stumbled across many cities in 2019.

The Knight Frank Prime Global Cities Index found that prices for prestige properties in 45 cities grew by an average of just 1.1 per cent over the year to the third quarter of 2019 – the slowest growth recorded in a decade.

Prices are now forecast to fall by 5 per cent in Vancouver, 3 per cent in New York, 2 per cent in Dubai and 1 per cent in Mumbai, over 2020.

Luxury property prices increased 2.6 per cent in Sydney and 2 per cent in Melbourne over the year, the report said, with the latest forecasts double the 2 per cent tipped for Sydney in 2019, and triple the 1 per cent forecast for Melbourne.

Michael Coombs of LJ Hooker Avnu said there had been a surge in demand for prestige properties in the lead up to Christmas from a mix of local, expat and foreign buyers.

“While there hasn’t been a lot of sales in the upper end [of the market], there still has been a lot of buyers around,” he said. “I don’t think there is enough property to satisfy demand.”

He suspected strong buyer demand and renewed market confidence would result in more high-end sales in the new year.

Mr Coombs added both Sydney and Melbourne had become increasingly appealing to the ultra-wealthy in the past decade, holding their own against global cities like New York and London.

“I deal with a lot of high profile people … who are blown away by how great our cities are,” he said, noting they offered a great mix of work, entertainment and lifestyle opportunities.

Ms Ciesielski said there was ripe opportunity for offshore ultra-high-net-worth individuals and expats to emerge during 2020.

“We’re watching the global political and economic environment and the currency play closely as a result,” Ms Ciesielski said.

“Its likely offshore buyers will follow similar patterns to previous years, although at a more gradual pace. Those looking for a waterfront property most interested in Sydney, and those looking for education for families will look to the Melbourne markets.”