Top End of Sydney Market Tipped to Skyrocket 12pc

Sydney has cemented its high-end property market as one of the strongest in the world, chalking up a 10.7 per cent increase in values over the past 12 months.

It is the 35th consecutive quarter that Sydney’s prime market has recorded price rises—and the forecast is for strong price growth into 2022.

Knight Frank’s Prime Global Forecast, which provides data on the world’s prime property markets, has predicted Sydney’s house prices will rise 9 per cent next year, second only to Miami at 10.1 per cent.

Knight Frank’s head of residential research Michelle Ciesielski said 2021 had been a year of strong performance with a third of cities in the index recording growth in excess of 10 per cent. Sydney is expected to hit 12 per cent by the end of the year.

“Although Sydney’s mainstream market has rebounded to record 24 per cent annual growth in the year to [September], the prestige market has experienced a lengthier run of upward trajectory in prices as this market advances in line with other developed global cities,” Ciesielski said.

“There have now been 35 consecutive quarters of uninterrupted positive annual growth in Sydney’s prime market, averaging 7.3 per cent growth since 2013.

“Although we’re hearing of record prices being achieved at the very top end, the growth in the prestige market is steadily coming off a much higher footing.

“If we were to compare this prime property performance to the mainstream market, there have been only eight quarters of positive annual growth to date, following seven quarters of decline when impacted by the tightening of lending restrictions.

“Contributing to Sydney’s prime values, the super-prime market is performing exceptionally well with many suburban records being achieved in excess of $10 million, especially for those homes located close to the water.”

Sydney wasn’t the only Australian city to perform well with Perth and the Gold Coast recording prime price growth above 10 per cent.

The Knight Frank report has flagged an 8 per cent prime property price growth on the Gold Coast in 2022, Melbourne could record 7 per cent growth, and Perth and Brisbane at 6 per cent.

“There are a number of global trends that may affect the movement of prime markets in 2022,” Cieselski said.

“The winding back of ultra-accommodative monetary policy is likely to bring asset prices back from being artificially inflated, and we are likely to see rental recovery across the board with top tier cities seeing demand accelerate as CBDs reopen and the buy-to-let institutional investment market heats up.

“Many governments around the world are also prioritising greater regulation of the rental market, with property cooling measures, non-resident restrictions and tighter regulation across the board of holiday rental platforms such as Airbnb a key focus.”

The Gold Coast, where prices have surged by 38.2 per cent between Broadbeach-Burleigh, is also earmarked for prime residential market growth next year.

The city, which has for the last three consecutive quarters recorded the highest number of prime sales transactions on record, will experience prime price growth of 8 per cent next year, whilst Melbourne will hit 7 per cent, followed by Perth and Brisbane at 6 per cent, respectively.

Cieselski said analysts would watch New Zealand as a bellwether for other prime markets following interest rate hikes.

More than 80 per cent of the 45 global cities monitored in the Knight Frank Global Cities Index recorded house price rises over the past 12 months, and more than a third experienced a steep rise in excess of 10 per cent.

Prime price growth has mirrored a rapid uptick in the number of millionaires in recent years.

According to new research commissioned by platform provider Praemium Limited, the number of millionaires skyrocketed by 30 per cent from an estimated 485,000 to 635,000.

Australian millionaires now control $2.77 trillion in assets, up 37 per cent from $2.02 trillion in 2020.

The number of millionaires in Australia has remained steady between 2017 and 2020 before dramatically rising this year. There were 424,000 in 2017; 434,000 in 2018; and 458,000 in 2019.

Global cities index: September 2021

^{_{^Source: Knight Frank Prime Global Cities Index}}