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Luxury property unfazed by rising interest rates as new records set
Quality trophy properties have remained highly sought after on the East Coast of the country since the start of 2023, with new record prices being achieved.
The lack of quality supply available in the market coupled with the momentum swing continues to positively impact the upper end of the property market. The strong prices being achieved in the prestige market are underpinned by this continued lack of supply.
Despite the prolonged increase in official interest rates during 2022 and the start 2023, the prestige buying cohort has been largely unaffected when compared to the broader market, which has eased until early 2023 before resuming a growth phase in recent months.
More broadly all national capitals have recorded positive upswings in dwelling values in April, led by the Sydney market with the high-end price bracket properties leading the way. In promising signs for the prestige market, both top quartile of the Sydney and Melbourne markets recorded solid gains last quarter (Sydney at +4.1% and Melbourne at +0.7%) with Sydney recording +1.4% in April and Melbourne +0.1% for the month.
The record price to date in 2023 is $69M for a waterfront Point Piper home on 1,200sqm in Spanish Mission style believed to be purchased by an Australian family living overseas. This follows the new Australian price record set on Christmas Eve 2022 with the $130M purchase of Uig Lodge also in Point Piper Sydney, a Scottish baronial-style estate on about 3,300sqm at the top of Wentworth Place.
This set a new benchmark in the nation’s most prestigious suburb, smashing the $100M previously recorded in 2018 for Fairwater, also in Point Piper. The $130M deal was struck in late December and is expected to settle in the first half of 2023. When it comes to Australia’s most expensive properties, Sydney’s eastern suburbs and northern beaches and Victoria’s Toorak lead the way.
Zooming in on the eastern states:
Sydney again featured strongly in the nation’s top luxury property sales since the start of 2023, with the prestige market displaying signs of strength on the back of continued demand for quality property and limited stock. Since the start of the year the most expensive sale was a Spanish-Mission style landmark home in Point Piper for $69M in late April, making it among Sydney’s top ten most expensive house sales of all time.
A five-bedroom mansion in Bayview Street Lavender Bay sold for $43M in late February and 83 Fitzwilliam Road Vaucluse sold for circa $40M this week, changing hands for the first time in 83 years. The most expensive apartment to sell so far in 2023 is a luxury unit in Crowns One Barangaroo complex which sold in mid-February for $26M.
Other top sales were the “Marara Estate” at Avalon Beach for $40M, 53-55 Cranbrook Road Bellevue Hill for $30M, a trophy home in Drumalbyn Road, also in Bellevue Hill for $25M, a penthouse unit in Notts Avenue Bondi for $24M, a resort-style home in Olola Avenue Vaucluse for $22M, a five-bedroom house at 22-24 Martin Road Centennial Park for $22M, a six-bedroom home at 4 Parsley Road Vaucluse for $21M, a home in Kent Road Rose Bay for $20M and a federation home “Urunga” at 2 Buena Vista Avenue Mosman for $20M.
The suburbs of Point Piper, Bondi, Mosman, Bellevue Hill, Darling Point, Woollahra, Double Bay, Mosman, Avalon Beach, Centennial Park, Bronte, Drummoyne, Warrawee, Vaucluse and Birchgrove also continued to feature several other luxury property sales since the start of the year.
What’s driving the Sydney market?
NAB Private Client Executive, Josephine Hanna, said: “The COVID pandemic created a significant shift in priority, as buyers are placing more value on lifestyle than ever before. This is reflected in increased demand for luxury lifestyle amenities including outdoor kitchens, resort-style pools and decadent parents’ retreats.
“At this end of the market, we’re seeing buyers wiling to pay a premium for homes that are finished to an impeccable standard and do not require any work or compromise on the part of the buyer. Luxury finishes, architectural design, expansive entertaining spaces, wine cellars and intergenerational living are all hallmarks of the current prestige property market.”
The most expensive property to change hands in Toorak since the start of the year has been the off-market transaction of a contemporary style mansion in Whernside Avenue in mid-April for $34M. This sale was however overtaken by the highest residential property sale in Victoria this year to date with the sale of the 1873-built, nine-bedroom mansion at Avon Court in Hawthorn for between $38M and $41M – the exact sale price is not yet known due to non-disclosure agreements.
A new unit benchmark was set in East Melbourne in early February with the sale of an off the plan apartment for $19M in a 10-storey development at 380 Albert Street, overlooking Fitzroy Gardens.
Toorak features heavily in Victorian prestige sales to date including a six-bedroom mansion in Macquarie Road for $30M, Ricky Ponting’s purchase of a six-bedroom 1930’s mansion at 26A Linlithgow Road for $20.7M, a home at 10 Irving Road for $12.8M, a 5-bedroom home in Myrnong crescent sold off-market for $12.35M and recently the $10.54M sale in Glenbervie Road Toorak.
Other notable sales included Fulham Avenue South Yarra at circa $17M, a four-level 1861-built Victorian mansion in St Kilda West for $16M and a six-bedroom home in Fulham Avenue South Yarra at $13.5M.
Melbourne’s Toorak remained the key luxury suburb in early 2023, other luxury suburbs such as East Melbourne, South Yarra, Armadale, Kew, Hawthorn East, and Brighton have also recorded strong activity to date.
What’s driving the Melbourne market?
NAB Private Client Executive, Darian Kuzma, said: “The prestige sector has been far less impacted by interest rate rises than other parts of the residential property market, because many buyers in this market are less dependent on borrowing to fund their purchases.
House prices are a basic product of supply and demand. We’re seeing demand for high-end property remain incredibly strong, while supply is of course, very limited. That is holding prices up in the prestige sector.”
Queensland’s highest reported sale of the year so far is for “Bellagio La Villa”, a sprawling 26-room, 20-bathroom, 15-car mansion on 49.37 hectares at 49-109 Tallebudgera Connection Road in the Gold Coast Hinterland. The residence sold under the hammer in early March for $24M making it the most expensive home ever auctioned in Queensland.
In Brisbane the top sale of 2023 to date sets a new record with a 130 year-old riverfront property in New Farm. ‘Amity’ sits on 2,127sqm, with the classic Queenslander, built in 1892, selling in late-April for $20.5M, making it the most expensive residential property to ever be sold in the city.
The prior Brisbane record was the $18.48M Kangaroo Point purchase back in 2017. The new record comes as the luxury market continues to outperform. A new apartment record was set in early February with the sale of a luxury unit in the “Lumaire Residences” apartment complex in Newstead for $12.95M. The sale broke the Brisbane per square metre price record becoming the most expensive apartment, at $24,000 per square metre.
Other notable sales to date in 2023 include the off-the-plan purchase, by an international buyer, of a full-floor apartment within a 37-level residential tower at Garfield Terrace at Burleigh Heads in late February for $10.75M and a three-level mansion at 22A Crescent Road Hamilton for between $9M and $10M. Given the reported increasing level of enquiry in the prestige market sector supported by rebounding migration, agents and buyers’ agents anticipate further increase in activity this year and the prospect of new record prices being set, largely due to the lack of quality stock. The luxury segment continues 2023 with momentum and it is anticipated to remain outperforming the broader housing market.
In Perth, the most expensive house to sell since the start of the year was a 6-bed home at 41 Keane Street Peppermint Grove which changed hands for $11.35M and a 5-bedroom, 5-bedroom mansion at 149 Forrest Street Peppermint Grove sold for $9.35M. Other notable sales include a modern six-bed home at 26 Hobbs Avenue Dalkeith sold for $8.255M, a four-bed waterfront mansion at 16 Majestic Close Applecross sold for $7.9M, a modern five-bedroom home at 47 Irvine Street sold for $7.85M and a six-bed mansion at 135 Circe Circle South Dalkeith sold for $7.35M.
In Adelaide, the most expensive house to change hands this year was The Dunes in Coopers Beach Road Nalyappa, a six-bedroom, architecturally designed modern-style residence sold for $8.25M. Other notable sales include 31 Malcolm Street Millswood which sold for between $3.5M-$4M and 29 Military Road Tennyson currently under contract for circa $3M.
The information contained in this article is gathered from multiple sources believed to be reliable as of the end of May 2023 and is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on the information in this article you should consider whether it is appropriate for you’re your objectives, financial situation or needs. You should seek independent legal, financial and taxation advice before acting on any information in this article. ©2023 NAB Private Wealth is a division of National Australia Bank Limited ABN 12 004 044 937 AFSL and Australian Credit Licence 230686.
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