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Smaller cities have outranked the major capitals for prime luxury residential real estate price growth, a new report has shown.
Knight Frank’s Prime International Residential Index (PIRI 100) tracks the movement of luxury residential prices across the world’s top 100 residential markets.
“Globally, prime residential prices performed better than expected in 2020, with markets having to weather the global pandemic and associated economic turmoil,” Knight Frank’s head of residential research for Australia, Michelle Ciesielski, said in a statement.
Perth was the top-ranked city in Australia, coming in at number 34 with 3.6 per cent annual growth, up from 0.9 per cent one year earlier, when it was ranked 63 – and the last Australian ranked city.
According to the research, property prices in Perth are rebounding off the back of population growth driven by prospering mining activity and resilient commodity prices.
“This rebound is across both the mainstream and luxury market, and with Perth being Australia’s fourth largest city, we believe it is undervalued for its population, and growth will continue to be significant,” Shayne Harris, national head of residential at Knight Frank, said.
“The pandemic has forced many to retreat in the comfort of their home for the best part of 2020, so it’s not surprising prime property is becoming increasingly more attractive in destinations known for their lifestyles such as Perth, the Gold Coast and Brisbane.”
Meanwhile, the Gold Coast saw an annual growth of 3.2 per cent, while Brisbane clocked an increase of 2.5 per cent.
Across the bigger capitals, Sydney had a 1.1 per cent growth, while Melbourne came in last with a 0.9 per cent increase as a result of its prolonged COVID-19 lockdown.
“Australia’s luxury residential property market fared well, with three of the five cities included in the PIRI 100 recording growth greater than the global average of 1.9 per cent, and in the case of Perth, nearly doubling it.
“COVID-19 was handled well in Australia, with a brief lockdown in all cities except for Melbourne, and when our cities were opened up, we saw a surge in pent-up demand, particularly as home owners re-evaluated their lifestyles.
“Grounded by travel bans, Australia’s luxury buyers focused on building their property portfolios at home, buoyed in part by the country’s bullish stock market and historically low interest rate environment,” Ms Ciesielski noted.”
While Perth enjoyed the highest growth in 2020, Sydney saw the highest volume of prime sales in the third quarter of 2020, with preliminary data indicating the fourth quarter surpassed these figures.
As of date, Sydney accommodates approximately 27,500 prime luxury homes, the report found.
PIRI 100’s top five are Auckland, Shenzhen, Seoul, Manila and Moscow, with growth ranging from 17.5 per cent to 9.9 per cent.