Sydney’s prime prices are expected to rise by 9 per cent next year, according to new data, making it the second highest city for prime price growth in 2022.
The Australian city was pipped by Miami, which is expected to achieve prime price growth of 10 per cent.
Knight Frank’s Prime Global Forecast data on prime property markets around the world shows Sydney is estimated to reach prime residential growth of 12 per cent by the end of this year, after recording 10.7 per cent growth in the year to Q3 2021.
According to the data, the reopening of borders, the return of investors, and the growing appetite amongst domestic buyers for second homes, heightened by recent lockdowns and travel bans, is expected to see prime prices accelerate further across Australia.
This trend is global, with data showing 84 per cent of global cities saw prime prices rise on an annual basis, with this percentage growing each quarter – indicating the trend is still gathering momentum.
Michelle Ciesielski, Knight Frank’s Head of Residential Research, said although Sydney’s mainstream market had rebounded to record 24 per cent annual growth in the year to Q3 2021, the prestige market had experienced a lengthier run of upward trajectory in prices as this market advanced in line with other developed global cities.
“There have now been 35 consecutive quarters of uninterrupted positive annual growth in Sydney’s prime market, averaging 7.3 per cent growth since 2013,” Ms Ciesielski said.
“Although we’re hearing of record prices being achieved at the very top end, the growth in the prestige market is steadily coming off a much higher footing.
“If we were to compare this prime property performance to the mainstream market, there have been only eight quarters of positive annual growth to date, following seven quarters of decline when impacted by the tightening of lending restrictions.
“Contributing to Sydney’s prime values, the super-prime market is performing exceptionally well with many suburban records being achieved in excess of $10 million, especially for those homes located close to the water.”
Sydney wasn’t the only Australian city to perform well in the prestige market in the year to Q3 2021.
All five major cities ranked in the top 23, from 45 global cities in the Prime Global Cities Index Q3 2021, averaging 9.3 per cent annual growth – although this is still shy of the overall rate of growth for the global index at 9.5 per cent.
While Sydney saw 10.7 per cent annual growth in this time, the Gold Coast and Perth were close behind with double-digit growth of 10.5 per cent and 10.4 per cent respectively.
Brisbane registered 8.4 per cent growth, while Melbourne continued to pick up pace with 6.5 per cent.
Following Sydney’s prime forecast of 9 per cent in 2022, the Gold Coast is earmarked to see the prime residential market grow by a further 8 per cent, with Melbourne closer to 7 per cent, followed by Perth and Brisbane at 6 per cent.
Ms Ciesielski said there were a number of global trends that may affect the movement of prime markets in 2022.
“The winding back of ultra-accommodative monetary policy is likely to bring asset prices back from being artificially inflated, and we are likely to see rental recovery across the board with top tier cities seeing demand accelerate as CBDs reopen and the buy-to-let institutional investment market heats up,” she said.
“Many governments around the world are also prioritising greater regulation of the rental market, with property cooling measures, non-resident restrictions and tighter regulation across the board of holiday rental platforms such as Airbnb a key focus.
“Outside of Australia, New Zealand is one of the first key economies to hike interest rates, and so many will be watching Auckland’s housing market closely for economic and policy impacts world-wide.
“Pleasingly, the US dollar is forecast to remain strong through 2022, and in Australia it is unlikely that we’ll see major changes in interest rates across the year.”