Australia’s luxury real estate market just realised its best quarter yet

According to a new report by Knight Frank, 1,429 properties in Australia’s prime residential real estate market changed hands over the first quarter of 2021.

This fixture represents a 17 per cent increase over the final quarter of 2020, which was the previous record holder, with sales volume of 1,224 properties.

According to Knight Frank’s head of residential research, Michelle Ciesielski, the closing of Australia’s borders in the wake of the pandemic remained one of the major drivers behind this activity.

“With many of Australia’s ultra-high-net-worth population currently planted on Australian soil, four of Australia’s major cities saw their second consecutive quarter of highest volume of prime residential sales on record.”

“So far, the first quarter of 2021 has seen 42 per cent of the total number of prime luxury residential property transactions recorded across all of 2020, so it’s likely we’ll see this astounding performance continue with more ultra-wealthy taking advantage of the low-interest lending environment.”

The report also indicated that the ultra-high-net-worth population of Australia grew in 2020 by 10.9 per cent. They added that this number is expected to grow by another 3.8 per cent annually over the next five years, driving additional demand in the priciest parts of the residential market.

In terms of annual capital growth, Perth’s prime property led the pack with 4.1 per cent. This was followed by Brisbane at 3.8 per cent and the Gold Coast at 3.5 per cent. Sydney came it at 1.9 per cent, while Melbourne trailed at 0.4 per cent.

“Underlying this pent-up demand, the prestige residential market tends to gain traction with a rallying stock market, so we’re likely to still see significant price growth on the horizon,” Ms Ciesielski said.

Despite this growing demand, the report said the supply pipeline for these kinds of properties is said to be plummeting.

Although Melbourne is due for over 7,000 new prime apartments and townhouses, the overall forecast remains 42 per cent lower than that of 2020.

Knight Frank’s head of residential, Shayne Harris, suggested that “developers across the country are continuing to shift their focus towards boutique apartment developments, which is addressing pent-up buyer demand, but these smaller projects result in less volume of prime apartments being built over the coming years.”

The report noted that the upward trend in sales volume has led to an increase in sales velocity.

“The number of days an established Australian prime property is listed on market has reduced by almost a week,” Mr Harris said.

“It’s still evident there are limited prestige listings across the country, with many keen buyers now making buying off-market transactions. Many prestige buyers focus on buying in the right location and remodel the home to suit their needs, especially with a focus on wellbeing and lifestyle and this has magnified over the past year.”