Sydney prime property prices expected to grow another 9% in 2022

With this growth forecast, the NSW capital will be the second-highest city for prime price growth in 2022 behind Miami, which will see a 10 per cent increase, as foreseen by the study.

Furthermore, Knight Frank’s Prime Global Cities Index for Q3 2021 stated that Sydney’s 10.7 per cent increase in the year to Q3 2021 is consistent with other global cities’ price growth of 33 per cent above 10 per cent over the year to date.

Michelle Ciesielski, Knight Frank’s head of residential research, said: “Although Sydney’s mainstream market has rebounded to record 24 per cent annual growth in the year to Q3 2021, the prestige market has experienced a lengthier run of upward trajectory in prices as this market advances in line with other developed global cities.”

Based on the study, prime prices grew by 84 per cent on an annual basis in global cities, and it keeps on growing each quarter, indicating that the trend is continuing to gain traction.

“There have now been 35 consecutive quarters of uninterrupted positive annual growth in Sydney’s prime market, averaging 7.3 per cent growth since 2013. Although we’re hearing of record prices being achieved at the very top end, the growth in the prestige market is steadily coming off a much higher footing,” Ms Ciesielski explained.

The head of research compared the performance of premier properties to the mainstream market and pointed out that there have only been eight quarters of positive yearly growth, so far, after seven quarters of downward trend due to tightened lending restrictions.

Research results anticipated premium prices will continue to rise across the country as borders open and mobility restrictions ease, investors return with renewed confidence in the market, and propelled by the heightened demand among domestic buyers for second properties.

Ms Ciesielski also highlighted the strong performance of Sydney’s suburban markets and the sea change movement that attracts buyers: “Contributing to Sydney’s prime values, the super-prime market is performing exceptionally well with many suburban records being achieved in excess of $10 million, especially for those homes located close to the water.”

Five major cities in the top 23

Sydney’s strong premium market performance in the year leading to Q3 2021 is exhibited by other major cities in Australia, an indication that the country’s property market is among the best in the world.

“There are a number of global trends that may affect the movement of prime markets in 2022. The winding back of ultra-accommodative monetary policy is likely to bring asset prices back from being artificially inflated, and we are likely to see rental recovery across the board with top tier cities seeing demand accelerate as CBDs reopen and the buy-to-let institutional investment market heats up,” Ms Ciesielski expounded as she weighed in on the top cities’ upward market trend.

In the Prime Worldwide Cities Index Q3 2021, all five main cities scored in the top 23 out of 45 global cities, with an average annual growth rate of 9.3 per cent, which is just slightly below the global average of 9.5 per cent.

During this period, as Sydney grew at a rate of 10.7 per cent each year, capital cities that are closely following behind are Gold Coast, registering a 10.5 per cent growth rate, and Perth, with a 10.4 per cent increase.

Brisbane likewise was on the rise at a rate of 8.4 per cent per year, while Melbourne grew at an annual rate of 6.5 per cent.

The head of research further added a global perspective on the variables affecting the housing market.

She noted that “many governments around the world are also prioritising greater regulation of the rental market, with property cooling measures, non-resident restrictions and tighter regulation across the board of holiday rental platforms such as Airbnb a key focus”.

Beyond Australia’s borders, Ms Ciesielski reported that one of the first major nations to raise interest rates is New Zealand, and so, people are monitoring Auckland’s property market to see its impact on global economy and policies.

She looked at the economy of the United States as well and commended that the US currency is expected to sustain its strength through 2022.

Going back to the local growth forecast in 2022, Ms Ciesielski expects the Gold Coast’s prime residential market to rise further by 8 per cent, Melbourne is expected to grow by 7 per cent, followed by Perth and Brisbane, which are both expected to grow at 6 per cent.

“In Australia, it is unlikely that we’ll see major changes in interest rates across the year,” she ended.