Luxury residential property prices in Perth, the Gold Coast and Sydney could rise by three per cent this year, while Brisbane is forecast to record two per cent growth.
The forecast comes from Knight Frank's latest Wealth Report, which puts Melbourne prime property price growth at a more modest one per cent in 2021.
The report's prime international residential index tracks the movement of luxury residential prices across the world’s top 100 markets.
Knight Frank head of residential Shayne Harris says demand for luxury property in Australia will continue to be strong, as a result of the pandemic and the continuing return of expats.
“The attributes listed as most important for Australian ultra-high-net-worths purchasing a new home in 2021 include outdoor space and leisure facilities or amenities,” Harris said.
“Australia’s ultra-wealthy are most likely to buy a new home locally, followed by purchasing a second home in the US, New Zealand, the UK then Israel.
“While ultra-high-net-worths from overseas list Australia as a number three destination behind the UK and the US,” Harris said.
An individual with a net worth of more than US$30 million is considered an ultra-high-net-worth. While prime property is seen as the most expensive and desirable real estate, generally defined as the top five per cent of each market, by value.
Prime residential index: Knight Frank
|PIRI 100||2020 Ranking||2020 % Change||2021 Forecast % Annual Change|
^Prime International Residential Index (PIRI 100) in the latest Knight Frank’s The Wealth Report 2021.
Luxury residential price growth was strongest in Australia's smaller cities, led by Perth, the Gold Coast and Brisbane last year, recording annual price growth greater than the global average of 1.9 per cent.
Findings from the latest REA Insights report show the number of Australian suburbs with a median over $3 million doubled in 2020 and could double again in 2021.
Perth is Australia's top-ranked city with 3.6 per cent annual growth. This is up from last year when it ranked 63.
The Gold Coast is second with 3.2 per cent annual growth, and Brisbane third recording 2.5 per cent growth.
Sydney was up by 1.1 per cent, and Melbourne came in at equal 63 with Oslo, up 0.9 per cent.
Moving up from the last Australian city last year to the first in this year's results, Perth's luxury residential market growth nearly doubled that of the global average.
“Property prices in Perth are coming off the back of several years of price decline, but recently population growth has improved with prospering mining activity and resilient commodity prices, and this has led to a strong rebound in the residential market,” Harris said.
“This rebound is across both the mainstream and luxury market, and with Perth being Australia’s fourth-largest city, we believe it is undervalued for its population and growth will continue to be significant.
“The pandemic has forced many to retreat in the comfort of their home for the best part of 2020, so it’s not surprising prime property is becoming increasingly more attractive in destinations known for their lifestyles such as Perth, the Gold Coast and Brisbane,” Harris said.
The report notes that on average, 22 per cent of the wealth of Australian ultra-high-net-worth individuals is directly allocated to property for their principal and second homes, while on average 24 per cent is directly allocated to a property investment portfolio.
Globally, New Zealand's city of Auckland leads the index with average prices ending the year 18 per cent higher.
This is largely attributed to New Zealand’s handling of the pandemic, its economic recovery, low mortgage rates and a limited supply of quality stock.