_Prime Residential Forecast 2023
The research reveals that prime price growth will rise on average by 2% next year, and though this is a reduction on the 2.7% predicted six months ago, 2023’s forecast growth still exceeds that recorded in six of the last ten years.
Key findings:
- Prime prices are expected to rise by 2% on average in 2023, down from the 2.7% predicted six months ago.
- Dubai leads the prime price forecast for 2023 with 13.5% annual growth.
- Sydney’s forecast of 0% annual change as at Nov 2022 is a decrease from the 9% forecast at Q4 2021.
- Sydney was rated among the top 5 cities for most likely home purchases in the next 1-2 years, by ultra-high-net-worth individuals.
Michelle Ciesielski, Head of Residential Research at Knight Frank, said “Although we saw Sydney luxury residential sales volume 7% higher in the second quarter of 2022 (A$3m+), the third quarter 2022 volume has now tapered back by 24% and this is likely to continue as we head towards the NSW State election. This lower sales volume will continue to impact price growth momentum in 2023, but interestingly, active prime residential listings remain low at a time when not much is being built, so we’re expecting Sydney’s prime price growth to pick up again by 2024.
“Lingering travel restrictions are still creating much lower prime residential viewings in Sydney from international buyers despite being an attractive safe haven to many. However, geopolitical tensions looming and the firm stance on keeping COVID-19 at bay in some Asian markets continues to curb activity. The currency play for many international buyers is as favourable now, as it was leading into the pandemic, but the recent doubling of FIRB fees by the Federal Government is a significant hurdle when considering this top-end of the residential market.”
Erin van Tuil, Knight Frank’s Head of Residential, said “As our Australian private wealth clients are increasingly agile once again, they’re also spending time preparing to shield any potential turbulence from global headwinds and tackling the impact of increased living costs and rising mortgage rates for their business activities. Many clients have already factored in part of this risk by spending the best part of the last two years building and rebalancing their domestic property portfolios.
“We still see strong underlying opportunities for the Sydney prime residential market over the coming year, such as the volatility in alternative assets including the stock market and cryptocurrency; the significant government investment in transport infrastructure starting to take shape; and the opportunity to create better smart technology homes.”
View the full report here