Four of Australia’s capital cities have been included in the top 23 international cities for luxury residential price growth, new research has shown.
Detailed in the Prime Global Cities Index – Q1 2019 report by Knight Frank, Brisbane was found to be the highest-ranking Australian city for luxury residential price growth, coming in at number 14.
Michelle Ciesielski, head of residential research at Frank Knight, said the growth in all of Sydney’s luxury residential markets were above the global average of 1.3 per cent for the last 12 months to March.
“Despite a recent cooling of the market in Sydney and Melbourne, these markets recorded yearly price growth of 2.4 per cent and 1.8 per cent, respectively, while Brisbane recorded year-on-year growth of 3.2 per cent and Perth recorded growth of 1.8 per cent.”
These luxury markets, particularly in Sydney and Melbourne, are being sustained through the creation of more millionaires (not including the value of their primary residence) – which are expected to grow by 21 per cent from 2018 to 2023, with a total of 116,049 millionaires in Sydney and 68,888 in Melbourne.
“Over the past five years, four millionaires were created every day in Sydney… [and] 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 time frame.”
Sarah Harding, partner and head of residential Australia at Frank Knight, said that not only will the number of those who can buy luxury real estate will increase, but this group was described as not facing pressures felt in the market from minimal wage growth and finance restrictions.
“Sydney is continuing to see positive growth in the prestige market, with limited luxury properties suitable for high-end buyers,” she said.
“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 international index’s rise of 1.3 per cent was considered to be the lowest average annual growth for nearly 10 years.
Ms Ciesielski said the slow international growth was due to political and economic headwinds, the cost of finance increasing and property market regulations increasing.
“In the first quarter of 2019, the threat of a global trade war loomed, uncertainty surrounding Brexit peaked, and the IMF projected that 70 per cent of the world’s economies would see a slowdown in growth in 2019,” she said.
“Add to this the rising cost of finance – the US alone has seen nine rate rises since December 2015, influencing not just the US but also the 13-plus currencies pegged to the US dollar – and a moderation in prime sales, and hence prices, was expected.”