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The prime real estate position Australians are willing to pay top dollar for

One in three super prime residential sales in Australia over the last year have been absolute waterfronts, with buyers paying greater premiums than ever before.

Knight Frank Australia’s Australian Waterfront Premium 2022 report shows waterfront real estate remains some of the most desirable property in the Australian residential market, representing a substantial share of super-prime sales.

Desirability, rarity, and price-point are key reasons waterfront real estate in Australia dominates the super-prime markets, which includes properties worth more than $10 million.

According to the report, over the last year, one-in-three of the 374 super-prime residential sales were found to be located on the absolute waterfront across Australia.

The most popular type of waterfront for super-prime sales was the harbour, representing a 64 per cent of super-prime sales in the last year – up from 48 per cent in Q3 of 2020.

This reflects the surge in the super-prime market this year, which Knight Frank research showed more than doubled in the first three quarters of 2021.

Properties with coastal frontage represented 16 per cent of total sales in 2021, followed by 13 per cent on a canal and 7 per cent on a river.

Knight Frank Australia Head of Residential Research, Michelle Ciesielski, said waterfront real estate was a tightly held market, with a finite amount of available land that could house such properties, and steady demand year-on-year.

“We also know that one of the effects of the pandemic has been an increased focus on the importance of the home, with many wealthy and ultrawealthy Australians inclined to deploy their capital onshore here where they otherwise would have spent it overseas,” Ms Ciesielski said.

This likely reflects the increase in price premium attributed to waterfront properties in 2021, increasing by 14.4 per cent in the last year to represent a 79 per cent price premium on their inland equivalents.

“Given the lengthy pandemic lockdown endured, it’s perhaps not surprising that waterfront homes in Melbourne have experienced the strongest growth of the five major Australian cities, with the waterfront premium increasing from 30 per cent in Q3 2020 to 37 per cent in Q3 2021,” Ms Ciesielski said.

“Sydney has taken the top position for greatest average uplift in waterfront sales this year, rising by 13.5 per cent in the last year to 119 per cent in Q3 2021.”

The prime markets in both Gold Coast and Perth continue to assert their growing share of voice, with the Gold Coast following Sydney at a premium of 71 per cent in Q3 2021, representing a growth of 5 per cent year-on-year, and Perth recording an average uplift of 67 per cent at 9.5 per cent year-on-year growth.

“Brisbane’s prime market has been dominated by interstate buyers and local upsizers who favour riverfront real estate in prestige suburbs, averaging a waterfront premium of 54 per cent at a 14 per cent uplift,” Ms Ciesielski said.

Direct access to water and exclusive maritime facilities was a key indicator of value in the waterfront market, the report showed.

Of the one-in-three waterfront transactions in the last year, buyers were willing to pay a premium for those that included an exclusive maritime facility like a jetty, pontoon or mooring.

With price premiums for waterfront properties rising across the board, the properties with harbour frontage represented the greatest premium at 114 per cent in 2021.

However, properties fronting the coast saw the greatest rise in premium, increasing 22 per cent year-on-year to hit 86 per cent in 2021.

The privacy and appeal offered by private beach access is also evident, with the premium paid for private beach access rising from 55 per cent in 2020 to 65 per cent in Q3 2021.

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Nicole Madigan

Nicole Madigan is Senior Journalist and Content Producer for Elite Agent.

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