This article is from the Australian Property Journal archive
Sydney’s prime residential property market is the 17th most expensive city in the world, according to Knight Frank. And $A1 million will buy you 171 sqm apartment or 181 sqm house.
According to the latest Knight Frank Prime International Residential Review, the average price for a two bedroom 125 sqm apartment in Sydney is approximately $730,000, equating to $5840 per sqm.
And the average five bedrooms 400 sqm villa/house price is approximately $2.2 million, equating to $5,500 per sqm.
Out of the top 18 cities across the global monitored by Knight Frank, Sydney’s prime residential market was the only city to record a slight fall in house prices over the 12 months to 2005.
The average villa/house price in Sydney fell 1.6% in 2005. However, Sydney’s apartment market stood tall with the average apartment price rising 12%.
Meanwhile, the average rental yield in Sydney apartments was 4.3% and 2.8% for villas/houses.
Despite Sydney’s relatively low expensive property market status, the Knight Frank report found that Sydney had the third highest cost of living.
According to Knight Frank,a litre petrol; one bottle of average table wine, a loaf of bread, one litre of milk, one CD, a 500g jar of coffee, one kg box of washing powder, a box of nappies, one kg sugar and a six pack of Stella Artois will set you back $A103 (€61.8).
At €70, Monaco has the highest cost of living of the locations covered in the Knight Frank Prime International Residential Index.
Prime London residential property was the most expensive property market in the world, with average house prices rising by 7% (prime central London recorded 8.2% growth) to reach an average value of €16,750 per sqm. Prime London residential yields came down by around 30 basis points during the year to stand at 4.9%.
According to Knight Frank, London has benefited considerably from its World City status and foreign buyers remain an important source of demand, accounting for around one third of prime London purchases in 2005.
Markets across France experienced another year of steady growth with Paris, the Cote d’Azur and the Dordogne all experiencing circa 5% growth in capital values. Rental yields are firmer in the south at around 3% while 3.5% is the norm in Paris.
Within Europe, the strongest price growth was recorded in central & eastern Europe. Moscow saw average prime values rise by a hefty 20% – 25%, in part driven by rental yields on apartments of nearly 6%.
Knight Frank said Moscow can expect to see the steady growth of the past few years reduce over the next few years although the city is vast and each year will see more of its 12 million plus population aspiring to own modern accommodation to match their improving lifestyles.
Meanwhile in the United States, the market in Florida has also benefited from the attractiveness of the dollar (from a European standpoint) and from a lower base price; 2005 saw average prices for prime properties increase by a dramatic 26%.
This is similar to the rise for apartment prices across the Atlantic in Cape Town, although with an 8% rise recorded for villas, it would appear likely that the 20% – 30% p.a. price rises seen in recent years are about to slowdown.
Knight Frank said whilst house prices in many major economies look over extended, the crash predicted by many has yet to occur and appears unlikely in 2006.
“More likely is a slowdown in price growth, especially in the more mature markets. Emerging markets should continue to experience double digit growth, however, this is not sustainable indefinitely both due to increasing supply levels and affordability/value for money issues.
“We expect to see increased activity from American, Russian and UK buyers while increased tourist inflows are anticipated from China and India which will doubtless lead to second homes purchases in their preferred locations in the not-too-distant future. Indeed, London is already seeing increasing buyer interest from both Indian and Chinese purchasers,” the report said.
According to Knight Frank, hotspot locations in 2006 will vary according to buyer preferences with many of the emerging markets attracting a high proportion of investor buyers and this will continue as long as the promise of high returns continues.
Within Europe this will include Bulgaria, Croatia, Cyprus and Turkey, and outside Europe locations such as Morocco, Thailand and South Africa.
“Among owner-occupiers we anticipate an increasing appetite for the security and comfort of managed properties, often within an estate environment offering a range of leisure and entertainment facilities, in particular areas with established infrastructure. This will favour the more mature destinations such as France, Italy, the United States, Canada and the Caribbean,” the report concluded.
By Kathryn O’Meara
