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Knight Frank research reveals promising luxury real estate trends

Australia’s major cities saw their highest quarter of prime residential sales volume on record.

At the same time, in the first quarter of 2021, the number of days a prime property was on the market compressed by almost a week, indicating there’s still more steam in the prestige market ahead, according to Knight Frank research.

Ultra-high-net-worth individuals (UHNWIs) grew by 10.9 per cent in 2020. 

There were 3124 Australians with a net wealth of US$30 million or more last year. 

Australia’s UHNW population is forecast to grow annually by 3.8 per cent over the next five years. 

Australia’s stock market has continued an incredible run and saw gains of 3.1 per cent in the first quarter of 2021.

This will take annual growth to 33.8 per cent, according to S&P Dow Jones Indices. 

Business conditions have also strengthened, moving 23.3 percentage points above the average, according to NAB data. 

Oxford Economics found the total new private investment was down 3.6 per cent at the end of 2020, but has now been forecasted to rebound to 12.3 per cent annual growth by the end of 2021. 

Prime sales performance 

Across Australia’s prime regions, the volume of sales in quarter one of 2021 tallied at 1429 prime properties – the highest on record. This was 17 per cent higher than quarter four in 2020. 

The Gold Coast in Queensland saw the biggest rise in annual sales turnover at 91 per cent, followed by Perth at 85 per cent. 

In quarter one 2021, the average days on market for a prime property in Australia was 119 days. 

This is five fewer days than the previous quarter, which saw an average of 124 days. 

Over this time, Perth’s prime properties were being marketed for 27 days or less on average, the most compression across Australia. 

Australian Prime Residential Review Q2 2021. Source: Source: Knight Frank Research

Prime price performance 

Capital growth for Australian prime property rose 1.1 per cent in the first quarter of 2021. It rose 2.9 per cent over the past year, ending in March 2021. 

Australia’s prime performance trended below the global average of 4.6 per cent annual growth. 

The national prime annual growth was led by Perth at 4.1 per cent, Brisbane at 3.8 per cent and the Gold Coast at 3.5 per cent. 

Sydney followed with 1.9 per cent, while Melbourne only saw 0.4 per cent annual growth. 

Knight Frank forecasts prime prices to further increase in Sydney, Perth and the Gold Coast by a minimum of three per cent, Brisbane at two per cent and Melbourne at one per cent by the end of 2021. 

In the year ending March 2021, those buying with Indonesian Rupiah (at an additional 13 per cent) were ranked most advantaged for major currencies when buying Australian prime property. 

In terms of relative value at this time, Knight Frank suggests one could buy 88sq m of internal luxury floorspace in Australia for US$1 million. 

City-wise, US$1 million would buy you 45sq m in Sydney, 87sq m in Melbourne, 103sq m in Perth, 109 sq m in Brisbane and 126 sqm on the Gold Coast. 

Globally, you’d be able to buy 31sq m in London or 23sq m in Hong Kong. 

Source: Knight Frank Research

Prime rental performance 

Gross rental yields for Australian prime property trended down to three basis points (BPS) to 2.64 per cent in the first quarter this year. 

A year ago, this yield was at 2.69 per cent. 

In quarter one this year, the Gold Coast recorded the strongest prime rental yield at 3.37 per cent. 

Rental growth was steady for prime properties in Australia over the first quarter of 2021. 

Over the past year, rental growth has increased by 1.1 per cent. 

In Perth, annual rental growth was 5.3 per cent, the most escalation across all Australian cities. 

Source: Knight Frank Research

New prime development pipeline 

A total of 26,700 medium and high density new apartments and townhouses were completed in Australia’s prime regions in 2020.

Knight Frank Research noted this was four per cent below the number built in 2019, but slightly above the three-year average of 26,425 new apartments and townhouses. 

Compared to 2020, there are 42 per cent fewer apartments and townhouses forecast in 2021, with 15,550 currently under construction.

In 2021, the greatest distribution of new apartments and townhouses will be found in Melbourne (7450), Sydney and the Gold Coast (,250). This is followed by Brisbane (1850) and Perth (1175). 

Australian new prime apartment prices have increased 3.2 per cent in 2020 to an indicative $25,500 per square metre. 

It ranges between an average of $13,000 per square metres to $65,000 per square metres. 

Sydney saw the greatest rise in new prime apartment prices over this time with 10.6 per cent, followed by the Gold Coast with 10 per cent. 

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