Australia’s prestige market remains resilient in the face of tougher conditions

Three Australian cities sit in the top 20 of the Knight Frank Prime Global Cities Index, showing the prestige market is still performing strongly.

The report from Q2 2018, which tracks the progress of 43 cities worldwide, shows Sydney, Melbourne and Brisbane are still keeping up with growth elsewhere, coming in as 15th, 17th and 20th respectively.

Perth also showed strong growth – 2.7 per cent – putting it at 23rd place on the index.

Prime property is defined by Knight Frank as the top 5 per cent of the housing market; essentially the most desirable and most expensive property in each city.

Despite the strong showing from Sydney and Melbourne in the rankings, they still fell from the last index, showing the prestige market isn’t immune to the cooling conditions.

Sydney dropped from ninth in the last index, Melbourne from 10th. Brisbane was also down from 19th and Perth from 21st.

The index overall increased by 2.6 per cent in the year to June 2018 – down from 4.4 per cent a year earlier – showing cooling conditions in the majority of markets. The growth specifically showed in the top-performing cities, which are all still rising but at a slower pace.

According to Knight Frank’s Head of Residential Research Australia, Michelle Ciesielski, “Australia’s prime residential market continues to perform with strength on a global scale, with three of our capital cities in the top 20.

“Despite a cooling mainstream market off the back of tighter lending practices, the prime market this quarter has continued to be resilient with buyers less impacted by these measures.”

According to Knight Frank’s The Wealth Report, globally the number of ultra-wealthy people (those with net assets of US$50 million or more) rose by 10 per cent in 2017.

In Australia the number rose by 9 per cent, the equivalent of 5.2 ultra-wealthy individuals per 100,000 of the country’s population.

Knight Frank’s Head of Residential Australia, Sarah Harding, said, “Prime properties are dependent on increasing wealth flows, taking away the reliance the mainstream market has on income growth. Over the next five years, Australia’s ultra-wealthy  population is projected to increase by 37 per cent.

“We are seeing more of our prestige buyers seeking their second and third homes, not for income-producing purposes. This has resulted in these buyers not releasing a property to market before buying another, limiting the number of prime opportunities.”

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Hannah Blackiston

Hannah Blackiston was an in-house journalist with Elite Agent. She worked with the company from January 2018 to January 2019.