Perth, Gold Coast the strongest luxury markets in 2023

Despite higher interest rates weighing on some property markets, luxury residential property in Australia has remained resilient, especially in Perth and on the Gold Coast, according to a new report.

Knight Frank’s Wealth Report 2024, found that Perth (5.2 per cent) and the Gold Coast (4.1 per cent) recorded growth higher than the worldwide average, sitting in 28th and 38th place out of the 100 locations tracked.

Sydney was in 49th place, with growth of 2.7 per cent, followed by Brisbane in 58th place, with growth of 2.3 per cent and Melbourne in equal 63rd place, with growth of 1.4 per cent.

In 2024, Sydney is predicted to have the highest prime price growth of all the Australian cities, rising by 5 per cent and coming in fifth, while Melbourne is predicted to have price growth of 3 per cent, coming in at number eight. 

Auckland is predicted to have the strongest luxury residential price growth in 2024, at 10 per cent.

Source: Knight Frank’s Wealth Report 2024

Despite rising prices across Sydney, luxury sales fell 37 per cent on average, largely due to supply shortages.

In Sydney, US$1 million bought 43sq m of luxury space in 2023, slightly less than the 44sq m in 2022. 

Meanwhile, on the Gold Coast you can get 112sq m for $US1 million, compared to 117sq m in 2022.

Despite this, these Australian cities are still much more affordable for luxury property than other markets around the world, such as Monaco, where you only get 16sq m for US$1 million, and Aspen, where US$1 million will buy you just 20sq m.

Knight Frank Partner Erin van Tuil said while volumes had dropped for Sydney’s prime residential market, values had not, demonstrating that Sydney remained a popular location to live and invest for high-net-worth individuals and ultra-high-net-worth individuals.

“Sydney also remains competitive as a global city for international investors, with US$1 million buying you 10sq m more in Sydney than London, 9sq m more than in New York and 21sq m more than Hong Kong,” Ms van Tuil said.

“The fundamentals of the Sydney market, such as lifestyle, transparent government and taxes and the sheer beauty of living in the Harbour City are unlikely to change, and therefore Sydney’s popularity is likely set to remain.

“With only so many waterfront locations available, for an ultra-high-net-worth individual, owning a slice of Sydney Harbour real estate remains a popular investment.”

The top-performing luxury market in 2023 was Manila (26 per cent) with Dubai (16 per cent), last year’s leader, dropping one spot. 

The Bahamas (15 per cent) finished in third place with Algarve and Cape Town (both 12.3 per cent) rounding out the top five.

Asia-Pacific (3.8 per cent) pipped the Americas (3.6 per cent) to the title of the strongest-performing world region, with Europe, the Middle East and Africa trailing (2.6 per cent).

While, sun locations continue to outperform city and ski markets, up 4.7 per cent on average. 

Ski resorts are close behind (3.3 per cent) and prime prices in the city market tracked have risen 2.7 per cent on average.

Knight Frank Head of International Residential and Country Research, Kate Everett-Allen, said at the start of 2023, economists expected a much weaker outcome across global residential property markets. 

“Stock markets were heading for more pain, inflation was veering out of control and the pandemic-fuelled property boom was set to end in tears as borrowing costs hit 15-year highs in some markets,” Ms Everett-Allen said.

“However, that never happened – we’ve seen a much softer landing in terms of price performance around the world.”

As markets adjusted to the higher cost of debt, sales took a bigger hit than prices in 2023. 

In London, New York, Dubai, Singapore, Hong Kong and Sydney luxury sales declined 37 per cent, on average, year-on-year.

Some markets corrected after strong falls due to rapid rate hikes (Auckland, Seoul), while others moved up the rankings in part due to supply shortages (Sydney, Singapore).

Some were influenced by policy and tax shifts, easing (Hong Kong), or tightening (Los Angeles), and some markets benefited from significant wealth inflows (Dubai, Miami).

Knight Frank Head of Research, Liam Bailey, said as wealth portfolios recovered in 2023, affluent buyers targeted residential property in the world’s luxury markets. 

“While 24 per cent of global UHNWIs were active in the market, inventory was down by almost a third, adding upwards pressure to prices,” Mr Bailey said.

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Rowan Crosby

Rowan Crosby is a senior journalist at Elite Agent specialising in finance and real estate.