_Wealth Report 2018: Sydney top 10 globally in prime residential growth

This year, the index included three Australia capital cities – Sydney, Melbourne and Perth. Sydney experienced 10.7% annual growth ranking 9th on the index, while Melbourne ranked 14th with 9.8% annual growth. Perth recorded positive annual growth for the first time in three years, with 1.3% annual growth. This saw the western city rank equal 55th with Tel Aviv on the PIRI 100.

Performance by region

On average, values rose globally by 2.1% in 2017, compared with 1.4% in 2016. Australasiaⁱⁱ was the best-performing region in 2017 with an average increase of 7.1% in prime markets, led by Sydney and Melbourne. Australasia remained the strong performing regional globally for the third year running, despite seeing growth ease from 11.4% in 2016 to 7.1% in 2017 following the implementation of cooling measures. Government cooling measures introduced in New Zealand, for example, saw Auckland’s prime annual growth go from 16% to 6.5%, influencing the overall Australasian growth. 

Although Sydney’s mainstream residential market has cooled, in part due to tighter lending rules for investors, demand for truly exceptional prime property in sought-after positions continues to outweigh the supply coming to market. The gap between prime and mainstream price performance is also evident in Melbourne. However, despite the strengthening prime price growth, the city dropped from 12th place in 2016 to 14th in 2017 due to other global cities moving higher up on the list. 

Perth is in a positive growth phase after a lengthy market correction, drawing local buyers to the prestige market as well as increased enquiry from the east coast. This saw it experience positive annual growth in prime residential property for the first time since 2014 – up from 6.4% in 2016 to 1.3% in 2017. 

PIRI Pagoda Index 

Knight Frank’s analysis of global property markets also explores how many square metres US$1 million can buy in key cities around the world.

Last year’s top four – Monaco, Hong Kong, New York and London – retained the top spots. Monaco is the most expensive city in which to buy luxury residential property, with US$1 million buying 16 square metres of accommodation. 

Sydney is the eighth most expensive city for prime property, buying 48 square metres for US$1 million. However, this still represents three times the amount of space that you could buy in Monaco. Melbourne and Perth are further down the list, with US$1 million buying 90 and 136 square metres of prime property respectively.

The square metres of luxury property US$1m will buy around the world (As at Dec 2017)

Source: Knight Frank Research, Douglas Elliman, Ken Corporation, The Wealth Report 2018 (Pg 38)

*New developments only. All data Q4 2017 based on exchange rate on 31 Dec 2017

^N/A denotes that Perth did not feature in graphic