Luxury Property Market Update

The return of wealthy expats and pent-up demand has fuelled record-breaking prestige sales, making for a year unlike any other.

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Even with Delta lockdowns affecting sales in Melbourne and Sydney, the prestige property market has continued to smash records in 2021. Not only have we seen a large volume of transactions, vendors and  agents are securing prices beyond anyone’s expectations. This has helped drive price growth in the broader residential market.

While luxury properties typically take longer than others to find a buyer, and are limited to a specific group, the lack of supply and return of expats, along with record low borrowing costs, have added momentum to the market. And with border closures putting a hold on overseas holidays, many buyers directed funds that would otherwise be spent on travel towards the purchase of a new home.

In the months ahead, we can expect to see a return of foreign purchasers as international travel increases. This should further boost sales in the prestige sector, particularly in the short- to medium-term.

What follows is a closer look at the prestige markets in the eastern states…

Melbourne

The city continues to experience some of the strongest demand on record for luxury homes.

In 2021, we’ve seen numerous sales over $10 million within the Stonnington local government area. In Toorak alone, there has been at least 35 sales in excess of $10 million in the 12 months to October 2021, with about 14 of these reported to be above $20 million. In October, a home at 47 Lansell Road, Toorak, sold for a reported $43.1 million, making it the most expensive property sold at auction in Australia and the second-most expensive property ever sold in Victoria.

Surrounding suburbs, such as Armadale, South Yarra, Hawthorn and Malvern, have reported strong results since the resumption of the market in mid-September. The lifting of Covid-19 restrictions has led to an increase in listings of trophy homes, particularly around Kew and Hawthorn, as vendors hope to engage pent-up demand, which continues to outstrip opportunities.

Records are not limited to Stonnington, with renewed interest also evident in Brighton and the Mornington Peninsula. In July, Brighton achieved a new record, with a house on Kent Avenue understood to have sold for about $25 million. One month earlier, a beachfront allotment in Seacombe Grove, Brighton, sold for $20 million, a record price for a vacant block in that most desirable suburb.

On the Mornington Peninsula, popular yet tightly held prestige locations such as Portsea and Flinders, have recorded sales in excess of $10 million, including a $23.5 million Flinders sale in July. Mount Eliza has also reported transactions in excess of $5 million.

Sydney

Home to some of the most expensive real estate on the globe, Sydney recorded 145 sales over $10 million in 2020, the most we’ve seen at this price point in 15 years. But the city has already moved well beyond that figure this year, with 170 sales recorded by the start of October (both settled and unsettled). This is the highest ever monthly rate of sales in excess of $10 million.

In the second quarter, the volume of homes selling between $3 and $10 million in Sydney’s prime regions increased by 23% from the previous quarter. Activity slowed slightly in the third quarter but demand appears to have returned since the city emerged from lockdown.

Key sales over the third quarter include Woollahra’s “Rosemont” estate, which was sold off-market and set a new suburb record, and Rose Bay’s waterfront “Villa Florida”; both properties are understood to have sold for about $45 million. The suburbs of Vaucluse, Mosman, Northwood, Bronte and Tamarama also recorded a number of sales over $20 million.

Luxury apartments have also proved popular. The ANZ Tower penthouse, which sold for $60 million, claims the title for 2021’s most expensive residential property thus far. Meanwhile, interest in the Sirius development at The Rocks demonstrates a desire among affluent buyers for lower density living. In excess of $400 million worth of stock was sold at the opening, including all seven penthouses. Of those, six were priced at about $20 million, with the largest selling for around $35 million.

Queensland

Despite Queensland’s border restrictions, demand for prestige real estate in Brisbane continues to be strong, fuelled by interest from locals and interstate parties (many buying sight unseen), plus wealthy returning expats. Drawn by the South East Queensland lifestyle, these buyers are setting new records, with suburbs such as Ascot, Kangaroo Point, Paddington and Hamilton achieving prices well above $7.5 million.

The Gold Coast is also reporting record activity, with prestige property sales focused on dwellings with beachfront or canal frontage positions. Popular areas for buyers include the Sovereign Islands, Isle of Capri, Mermaid Beach, Broadbeach Waters, Currumbin and Palm Beach. Meanwhile, on the Sunshine Coast, they’re continuing to enjoy the strongest market conditions ever for the luxury segment, with the Noosa region totalling 28 sales over $5 million between July and October.

The information contained in this article is gathered from multiple sources believed to be reliable as of the end of October 2021 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 this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, property, financial and taxation advice before acting on any information in this article.

BY MARK BROWNING, HEAD OF PROPERTY SERVICES GROUP, NAB