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Prestige property market mixed across the country

The prestige property market has softened on the East Coast but continues to hold up well in the smaller capital cities according to the latest Herron Todd White (HTW) Month in Review.

In the November report, HTW Chief Executive Officer Gary Brinkworth said demand for prestige property remained high in locations like Adelaide, while the larger markets of Sydney, Melbourne and Brisbane are starting to see declines.

“It’s fascinating to see how the prestige price sector in various locations is reacting to economic challenges,” Mr Brinkworth said.

“In some cases, demand appears to have continued unabated and the result has been incredible prices for some of our country’s most striking residential property.”

HTW National Director of Residential Ben Esau said inflation and interest rate changes were having a big impact on the prestige property market.

“The purchasing power of buyers can also rapidly change prestige markets, particularly in Sydney, Melbourne and, to a lesser extent, South East Queensland,” Mr Esau said.

“In addition, this buyer and seller segment can be more cautious on the wider economic outlook and, if not pressed, can retreat from buying or selling decisions until there’s more certainty.

“In other capital cities such as Adelaide and Perth, activity exceeds the east coast capitals, as the price points are relatively lower and buyers coming from higher priced cities are less impacted.”

Sydney

HTW Director Shaun Thomas said the prestige market in Sydney had softened over the course of the year.

“In general, the top quartile of properties has seen the largest decline in value in 2022, however, properties above $5 million only make up a small subset of the top quartile of properties and prestige buyers tend to be less sensitive to interest rate movements than others within the top quartile,” Mr Thomas said.

“Whilst we have seen softening in the prestige market, the decline in new listings of prestige properties has helped to somewhat offset the drop off in buyer demand.

Mr Thomas said after a very strong 2021, the prestige eastern suburbs market remained strong until early 2022. 

“Since April however, activity in this market has declined quickly as a Federal Election, interest rate rises and volatile equity markets, as a result of inflationary pressures and the war in Ukraine, have reduced both buyer demand and vendors looking to sell,” he said.

“Whilst prices are softening, the lack of supply is helping to hold up prices in this market.”

Melbourne

HTW Director Perron King said the prestige property market had remained resilient over 2022 as more international and local buyers compete intensely for the scarce supply of luxury homes offered on the market. 

“The luxury upper end of the property market of $10 million and above has remained strong and this upper end has continued to outperform the broader property markets,” Mr King said.

“The opening of the international borders has allowed the big players from across the world to return to their favourite destinations.

“These record-breaking recent sales continue to exceed expectations within this market, indicating that prestige buyers aren’t concerned by rising interest rates and are willing to pay a premium for quality homes.”

Brisbane

HTW Director David Notley said prestige property has remained reasonably buoyant in Brisbane throughout 2022. 

“We have seen continued demand with 36 sales recorded in excess of $5 million to date – 12 of which are currently under contract,” Mr Notley said.

“This turnover is not as strong as 2021 when a record 52 sales were recorded in excess of $5 million, however the fall in sale numbers this year is more about supply.

“There are plenty of exceptional abodes in Brisbane, but very few are on the market at any given moment. 

“So, if you are in the market for an impressive holding in Queensland’s capital, you will be competing with other luxury buyers for the few homes on offer. 

“Highly regarded inner-city locations are particularly prized and property at prestige price points tends to be of supreme finish and presentation.”

Adelaide

HTW Property Valuer Nick Smerdon said Adelaide’s prestige market had continued its strong performance in 2022. 

“Searches have revealed upwards of 130 recorded $3 million plus transactions in the past 12 months compared to 85 in the 12 months prior,” Mr Smerdon said.

“This market has been driven by the growth of the broader property market and high net worth purchasers who do not have to rely heavily on lenders during a time of increasing interest rates. 

“The prestige dwelling market within Adelaide typically begins at a base of $3 million and ranges up to $5 million with an ultra-prestige market of $5 million and above.”

Perth

HTW Director Chris Hinchliffe said in the metro prestige market the start of 2022 was a continuation of a strong 2021. 

“The market over winter has settled with factors such as interest rate rises and global economic uncertainty playing a part, however there is still strong demand out there and limited supply, resulting in people waiting for the right property to hit the market and then pouncing, but if you don’t have a new place already secured, you can’t sell your own property, hence we are stuck in this cycle of pent up demand and no supply,” Mr Hinchliffe said.

“It is worth noting that despite the prestige market still performing strongly across Western Australia, it is currently being outperformed by the lower end of the market.

“There is talk in the media of the market turning, however what we are seeing on the ground, especially in the Perth metro area, is that the prestige market does not have the same volumes of activity as it did in 2021 and early 2022, but only due to a lack of stock on the market, while the lower end of the market is still performing strongly. 

“This is dragging the median price down, which makes it look like the market has weakened but really, it’s just the effects of different sectors outperforming others.”

Darwin

HTW Valuer Cameron McDonnell said the prestige property market in Darwin performed well throughout 2022 with some notable sales in Darwin and Katherine.

“Gone is the notion of the worst home in the best street; buyers now want the best home in the best street as the cost of renovation increased and sourcing quality contractors and builders became more difficult,” Mr McDonnell said.

“The prestige market in Darwin is well set for 2023, with confidence returning to the market. 

“Even with the recent interest rate rises, the market has continued to perform strongly across most segments.”

Canberra

HTW Assistant Property Valuer Nicole Claughton said the prestige housing market in Canberra had continued to break records as the property market continued to increase from previous years.

“Canberra had a new record sale in October 2022 of $9 million for a property in Deakin, which overtook the $8 million sale of a home in Red Hill in 2020,” Ms Claughton said.

“In saying this, the number of buyers is significantly lower compared to the nonprestige housing market and the selling period is longer due to the price point of these prestigious houses, however records are still being broken, even with the market in Canberra starting to weaken.”

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Rowan Crosby

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