This article is from the Australian Property Journal archive
PERTH’S heated residential market recorded the highest price growth in the Australia’s luxury sphere in the year to the end of June, outpacing the global average as affordability limits were reached and slowed down the market.
Knight Frank’s latest Prime Global Cities Index showed Perth’s prime residential property prices lifted 3.7% over 12 months, one of four cities in the country to record positive growth.
Sydney posted 3.7% and Brisbane 2.4%, while Melbourne rose a modest 0.8%.
The Index, which tracks the movement of prime residential prices across 44 cities worldwide, found annual price growth slowed from the 4.1% seen in the March quarter to 2.6% in Q2, well below the long-term average of 5.3%.
One quarter of markets recorded negative growth over the 12 months – up from 18% of markets in Q4 of 2023.
Adam Ross, associate director at McGrath, Knight Frank’s partner in Australia, said Sydney’s prime market was performing well, particularly the super-prime market, of $10 million-plus properties.
“Growth in the super-prime segment of the Sydney market continues in 2024 as we face an ongoing lack of supply coupled with healthy levels of demand,” he said.
There were more than 310 transactions recorded in excess of $10 million during calendar 2023. To date in 2024, there has been just over 150 transactions.
“Historically, there has always been a surge in sales as the year closes out but at this rate it’s unlikely we will come close to last year’s volume due to the lack of supply,” Ross said.
Among the latest deals are the sale of a four-bedroom, five-bathroom penthouse at the top of the Greenland Centre at 115 Bathurst Street in the CBD – the tallest residential building in the city. A speculated $30 million was paid for the penthouse, which is perched across the top two floors of the 83-storey development and has 700 sqm of indoor and outdoor space.
In the inner western suburb of Strathfield, downsizing owners have just bagged $12.25 million – a suburb record – from their sale of a three-storey, six-bedroom home, which features a home theatre, infinity pool, tennis court, gym and wine cellar.
A property at 18/2-10 Le Vesinet Drive, Hunters Hill in Sydney, with harbour views, sold for $9.55 million at auction in June, via Matthew Ward of McGrath.
Manila on top
Of the 44 ranked cities around the globe, Manila recorded the highest annual growth for luxury residential property prices at 26%, followed by India pair Mumbai (13%) and Delhi (10.8%).
Los Angeles (8.9%) and Miami (7.1%) were next, followed by Nairobi, Madrid, Lisbon and Seoul, with San Francisco and Dublin tied for 10th spot.
The most improved market in the June quarter was Stockholm, with its negative growth easing from 6.1% to 2.6%. Lison improved from 1.8% to 4.7% growth, while San Francisco, Dublin, and Nairobi were also in the top five for improvement.
At the other end of the market, Dubai swung from 15.9% growth in the March quarter to a 0.3% loss, while Madrid and Tokyo both recorded growth in the June quarter, albeit more than 10% below the March period.
According to the Knight Frank, the global slowdown in growth for luxury residential property prices points to the limits of affordability being reached in many markets.
Rising interest rates in late 2022 and early 2023 pushed up mortgage rates and prompted a sharp decline in global housing markets. From mid-2023, earnings growth outperformed house prices and the supply of stock for sale in most prime markets lagged demand, sparking a lift in prices.
“The slowing in price growth this quarter across global prime markets reflects the fact that, without further stimulus from rate cuts, the bounce in market pricing we have seen over the past few quarters is running out of steam,” said Knight Frank global head of research Liam Bailey.
“The biggest influence on future price growth lies in the hands of central banks and their confidence to cut rates further over the next 12 months.”
