_Australian cities outpace global average for luxury residential price growth
The Knight Frank Prime Global Cities Index – Q1 2019, which tracks the movement in prime residential prices (the top 5% of the housing market in most cities, by value) across 45 cities worldwide, revealed Brisbane was ranked 14 for luxury price growth, followed by Sydney (18), Melbourne (22) and Perth (23).
The overall index increased by 1.3% in the year to Q1 2019, its lowest average annual rate of growth since Q4 2009, and down from 1.8% in the previous quarter.
Over the past decade, the average rise in luxury prices has been 57.4%, according to the Knight Frank research.
Knight Frank’s Head of Residential Research Australia Michelle Ciesielski said although it was still rising, prime global residential price growth had continued to moderate due to political and economic headwinds, the rising cost of finance and more property market regulations around the world.
“The Australian luxury market continues to perform well, with Sydney, Melbourne, Perth and Brisbane all recording growth in luxury residential prices higher than the overall average of 1.3% in the 12 months leading up to the end of March this year.
"Despite a recent cooling of the market in Sydney and Melbourne, these markets recorded yearly price growth of 2.4% and 1.8% respectively, while Brisbane recorded year-on-year growth of 3.2% and Perth recorded growth of 1.8%."
Ms Ciesielski said Australia’s luxury residential markets were expected to continue to perform well going forward, particularly Sydney and Melbourne, where the number of high-net-worth individuals – those with a net worth of more than US$1 million, excluding their primary residence – was expected to grow by 21% from 2018 to 2023 to reach a total of 116,049 in Sydney and 68,888 in Melbourne.
“Over the past five years four millionaires were created every day in Sydney,” she said. “This is expected to rise to 11 millionaires per day over the next five years.
“In Melbourne, we saw three millionaires created per day over the same period, with projections it will rise to seven millionaires a day over the next five years.
“Perth’s millionaire numbers are expected to double from two per day over the past five years to four per day over the next five years, while for Brisbane the figures will triple from one to three millionaires being created every day over the same timeframe.
Knight Frank Partner & Head of Residential Australia Sarah Harding said: “Not only will there be more people with more money to buy luxury residential property in Australia, but we have found the majority of buyers in the prestige market across the country are not under the same pressures experienced by those in the mainstream market of minimal wage growth and restrictions on finance from the banks.
“Sydney is continuing to see positive growth in the prestige market, with limited luxury properties suitable for high-end buyers.
“They’re looking not only for superb quality finishes, but smart technology and high levels of privacy within their luxury residences.
“With competition for limited stock, we expect to see positive price growth for luxury homes, albeit at a more sustainable pace than in previous years.”
The Knight Frank Prime Global Cities Index – Q1 2019 found Russia and CIS was the strongest performing world region in the year to Q1 2019, with Moscow rising up the rankings to take the number two spot, with 12% growth in prime residential prices over the past year.
European cities accounted for seven of the top 10 rankings for annual growth. Berlin was the top ranked city, with 14.1% annual growth, with Frankfurt (9.6%), Edinburgh (7.6%) and Paris (7.5%) also out in front due to strong tenant demand, limited new supply and relative affordability.
The Knight Frank research found Miami leads the four US cities tracked by the index; its appeal boosted by the State and Local Tax (SALT) deduction ruling.