Australia’s ultra-luxury residential market, largely unaffected by the impact of recent lending restrictions, has continued to record positive growth in the prestige sector of the market.
Sydney, Melbourne, Brisbane, the Gold Coast and Perth make up the five Australian cities which rank in the world's top 30 cities for luxury residential price growth.
The major east coast cities of Sydney, Melbourne, Brisbane and the Gold Coast have now recorded 25 quarters, or more, of positive annual growth for luxury property, according to Knight Frank’s Prime Global Cities Index for the third quarter 2019.
Defined as the most desirable and expensive property in a given location, prime property is generally the top 5 per cent of each market, by value.
Sydney ranks 17th in the global rankings, with 2.6 per cent annual growth, Melbourne at 21st spot recording 2 per cent growth.
Brisbane followed closely ranking 22nd with 2 per cent growth, the Gold Coast which was included in the Index for the first time earlier this year moved up the rankings to 26 with a 1.3 per cent increase, and Perth ranked at 30th recording a 0.7 per cent rise.
| City | 12-Month Change (Q3 2018 -Q3 2019) |
|---|---|
| 1. Moscow | 11.1% |
| 2. Frankfurt | 10.3% |
| 3. Taipei | 8.9% |
| 4. Manila | 7.4% |
| 5. Berlin | 6.5% |
| 6. Guangzhou | 6.2% |
| 7. Geneva | 5.6% |
| 8. Zurich | 4.5% |
| 9. Delhi | 4.4% |
| 10. Madrid | 4.2% |
| 17. Sydney | 2.6% |
| 21. Melbourne | 2% |
| 22. Brisbane | 2% |
| 26. Gold Coast | 1.3% |
| 30. Perth | 0.7% |
Knight Frank’s head of prestige Residential Deborah Cullen says the top end of the market is showing more consideration and time in transacting.
“There is still strong interest from local and expat buyers for blue ribbon areas and for “best in class” assets, in particular the waterfront areas of Sydney,” Cullen said.
“Growth in prime property prices closely follows the performance on the stock exchange,” Knight Frank head of residential research Michelle Ciesielski said.
“And there have been some significant gains made on the Australian sharemarket in 2019.
“Collectively the Australian prime market has continued to see sustainable growth of 2 per cent in the year ending September 2019, whilst the sharemarket recorded a 7.7 per cent return,” Ciesielski said.
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Slowdown gathers pace in top-tier cities
The global cities index increased by just 1.1 per cent in the year to September 2019, down from 3.4 per cent last year, with slower prime price growth attributable to mounting economic headwinds.
Despite a longer-than-expected period of loose monetary policy and steady wealth creation, the report notes that luxury sales volumes are at their weakest for several years in many of the first tier global cities.
“Slower global economic growth– the IMF lowered its 2019 forecast from 3.3 per cent to 3 per cent in October – along with escalating headwinds: US-China trade relations, Hong Kong’s political tensions, a US presidential election in 2020 and the Brexit conundrum are influencing buyer sentiment,” the index notes.
Moscow recorded the highest rate of growth with an 11 per cent increase over the year to September.
The report notes that Moscow leads the index largely due to strengthening demand and the completion of a number of high-end projects in prime areas like Ostozhenka and Tverskoy.
The prime global cities index is a valuation-based index that tracks the movement in prime residential prices in local currency, using data, across 40 cities.
