Australian Luxury Homes Continue Price Growth in the First Quarter of the Year

Homes in the top five per cent have continued to see price growth in the first quarter of the year, with Perth leading the pack.

Today, Knight Frank has released their global Q1 2021 Prime Global Cities Index and the research shows that in our key Australian cities, Perth noted 4.1 per cent growth, Brisbane 3.8 per cent growth and the Gold Coast 3.5 per cent growth, leading the uplift in prime residential markets over the past 12 months.

Global averages are still trending above the Australian market averages, and our major cities of Sydney and Melbourne have experienced slightly softer growth at 1.9 per cent and 0.4 per cent respectively. 

Globally, prime residential prices are rising at their fastest rate since Q4 2017 with housing markets in value terms increasing 4.6 per cent over the past 12 months.

Eleven cities in the world registered double-digit priced growth up from just one a year ago. Low mortgage rates – record lows in some markets – tight stock levels and a desire for space post-lockdown have led to an uptick in demand which is contributing to this record growth. 

Though Australia’s growth is relatively moderate compared to some of the fastest rising residential markets in the world – for example Shenzhen as the city with the fastest rising prime prices in the year to Q1 2021 at a 19 per cent – our residential markets are still experiencing notable growth year on year. 

“We have recently witnessed some incredible record sales at the very top end of the market, although when charting annually, the prime market price growth is coming off a much higher base than the mainstream market,” Knight Frank Head of Residential Research Michelle Ciesielski said.

“Although prime price growth is trending below the global average in Q1 2021, the five major Australian cities have reported positive annual growth every quarter since Q4 2017. When taking Perth out of the equation, the last time negative annual growth was recorded was further back in September 2013,” she continued.

“Where responsible lending created pent-up demand in the mainstream market in late 2019, the prestige market with less reliance on finance to transact, saw sustainable continued growth through this time. Fast-forward to 2021, more prestige property buyers are leveraging the low interest rate environment encouraging them to diversify their portfolios with alternate assets,” Ciesielski concluded.

According to CoreLogic, Australian homes in the upper quartile (the most expensive 25 per cent of properties) have been leading the way in terms of growth as prices continue to rise across the nation.

The past three months have seen the upper quartile of capital city housing markets record an 8.8 per cent rise in dwelling values compared with the 4.1 per cent lift in values across the lower quartile.

Sydney, Melbourne, Brisbane, and Adelaide are exhibiting this trend of higher results at the more expensive end of the market, whilst the remaining capitals are performing more evenly around the valuation quartiles.

The biggest disparity in results between the upper and lower quartiles can be seen in Sydney, where upper quartile housing prices have risen by 11.4 per cent in the last three months, whereas lower quartile values have only increased by 5 per cent, according to CoreLogic.

The broad difference can be explained in part by the faster rate of growth in house prices compared to unit values, CoreLogic said, but the effect can be seen across housing styles, with both upper quartile house values and upper quartile unit values doing well.

“Although the mainstream market has recently seen an uplift in listings with most markets heating up, we’re still experiencing the prestige market being very tightly held,” Knight Frank Head of Residential Australia Shayne Harris said.

“With the Australian ultra-wealthy population likely to spend a second consecutive winter at home, this is only expected to drive stronger price growth as the year progresses. Lifestyle properties will remain hotly contested whether that be in the city or in regional areas, with many of our clients not looking to factor in travel abroad for at least the next few years,” Harris commented.

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