This article is from the Australian Property Journal archive
LUXURY residential prices surprised on the upside in 2023, with both Perth and the Gold Coast recording growth higher than the global average.
Knight Frank’s The Wealth Report showed buyers are getting a little less bang for their buck in Sydney and the Gold Coast – US$1 million will get you 43 sqm in Sydney in 2023, down from 44 sqm a year earlier, while it gets you 112 sqm on the glitter strip last year, down from 117 sqm.
However, Australian cities are still much more affordable for luxury property than other markets around the world. In Monaco, you’ll get only 16 sqm for US$1 million, and in Aspen just 20 sqm.
The sum will get 22 sqm in Hong Kong, 32 sqm in Singapore, 33 sqm in London, 34 sqm in New York, 38 sqm in Los Angeles, 40 sqm in Paris, and 42 sqm in Shanghai.
Knight Frank’s latest Prime International Residential Index (PIRI 100) found luxury residential property prices climbed by a solid 3.1% on average across 100 selected locations around the world. Both Perth (5.2% growth) and the Gold Coast (4.1%) recorded growth higher than the global average, putting them in 28th and 38th place respectively.
Sydney came in in 49th, equal with Barcelona, with growth of 2.7%. Brisbane was in 58th place, with growth of 2.3%, and Melbourne in equal-63rd place with 1.4%.
Of the 100 markets tracked, 80 recorded flat or positive annual price growth. Manila (with growth of 26%) led the rankings, while last year’s titleholder Dubai (16%) slipped to second. The Bahamas (15%) was third place with Algarve and Cape Town (both 12.3%) completing the top five.
Asia-Pacific (3.8%) pipped the Americas (3.6%) to be the strongest-performing world region, with Europe, the Middle East and Africa trailing (2.6%).
Sun locations continue to outperform city and ski markets.
“At the start of 2023, economists were expecting a much weaker outcome across global residential property markets. Stock markets were heading for more pain, inflation was veering out of control and the pandemic-fuelled property boom was set to end in tears as borrowing costs hit 15-year highs in some markets,” said Kate Everett-Allen, head of international residential and country research at Knight Frank.
“However, that never happened – we’ve seen a much softer landing in terms of price performance around the world.”
In Sydney, luxury sales fell over 2023 by 37% on average, largely due to supply shortages. London, New York, Dubai, Singapore and Hong Kong recorded the same result.
Liam Bailey, global head of research at Knight Frank said that as wealth portfolios recovered in 2023, affluent buyers targeted residential property in the world’s luxury markets.
“While 24% of global UHNWIs were active in the market, inventory was down by almost a third, adding upwards pressure to prices.”
Meanwhile, The Wealth Report showed membership into the top 1% club of wealthiest people in Australia has become slightly easier, with the threshold falling from a net individual wealth of US$5.5 million in 2022 to US$4.673 million in 2023. Australia now ranks seventh in the world for the money required to be in the top 1% of wealthiest people, falling from its ranking of third last year.
The number of UHNWIs globally increased by 4.2% in 2023, more than reversing the decline witnessed in 2022.
Classic cars are the top investments of passion for UHNWIs in Australia, with 61%. Next is art (58%), wine (48%) and watched (42%), before a gap to jewellery (18%), luxury handbags (17%) and rare whisky (15%).
Knight Frank’s luxury Investment Index, which tracks the value of 10 investments of passion, edged into marginal negative territory for only the second time. Prices were down on average by 1%, despite a year that saw record-breaking sales for Scottish whisky, Ferrari 250 GTO, blue diamonds, and even swords.
Globally, art proved to be the best-performing luxury asset class in 2023, with prices rising 11%. Next were jewellery (8%), watches (5%), coins (4%) and coloured diamonds (2%). It was a bad year for rare whisky – down 9%.
