Forget the million dollar price tag for a prestige property, $4 million is the new $1 million, according to Ray White’s Nerida Conisbee.
In a recent look into the luxury property market, Ms Conisbee noted the sector was among the beneficiaries of the pandemic. And, like other areas, it was being driven by low interest rates, high savings, more time spent at home and a desire for space.
“Added to this has been some particularly strong performance of some parts of the economy because of the pandemic,” Ms Conisbee wrote in the most recent Ray White Now.
“The sectors that saw the biggest uplift in 2020 according to the ABS business survey include mining, health and retail trade.
“Anyone employed in very senior positions or with businesses in iron ore, pathology, large format retailing or supermarkets would have had a bumper year. Many of them have bought very nice homes as a result.”
Noting there was no official definition of the luxury market, Ms Conisbee said her analysis loosely defined it as suburbs with a median price tag of over $3 million, while ultra luxury was considered over $10 million.
$4 million is the new $1 million
Ms Conisbee explained each decade the most expensive suburbs in Australia go up around $1 million.
“In 2001, $1 million was the benchmark, with 0.5 per cent of suburbs priced over this median. By 2011, it had increased to $2 million,” she said.
“This year, it should have been $3 million however particularly strong price growth through the pandemic has led to $4 million setting the benchmark.”
For units, the price jumps for luxury have been lower. In 2001, $500,000 was the starting point for unit in a high-end suburb. That has now increased to $1.5 million.
Multimillion dollar suburbs
It’s hardly a surprise that the high-value suburbs are centred around Sydney, and to a lesser degree, Melbourne.
Ms Conisbee noted Sydney dominated both the most expensive suburbs and luxury homes market.
“Almost all suburbs with a median over $4 million are in Sydney, with the exception of Toorak in Melbourne and Newrybar in northern New South Wales,” she said.
“Mosman tops the list nationally for the most $10 million house sales since the start of the pandemic.”
Sydney is also the only place where units top the $1.5 million mark, with the CBD boasting the most apartment sales valued at over $3 million.
Interestingly, Kangaroo Point in Brisbane comes in second on the top performing apartment price list, while Adelaide also makes the top 10.
“Regional areas have also seen a number of luxury sales,” Ms Conisbee noted.
“Byron Bay tops the list. It has seen more than a doubling of $10 million plus house sales through the pandemic.”
Dominating the list, however, are regional Queensland locations, specifically the Sunshine Coast and Gold Coast.
While Melbourne has the second highest number of luxury house sales, it comes in third for luxury apartment sales.
“Queensland comes in second primarily because of the large number of luxury apartments on the Gold Coast and Sunshine Coast,” Ms Conisbee said.
So, what is the outlook for the market for luxury property moving forward?
Ms Conisbee noted finance restrictions came into place on 1 November. However, she said research had shown these primarily impact first home buyers and lower priced areas.
“If you were hoping to get a bargain mansion or luxury apartment on the Sunshine Coast, Bronte or Toorak, you may be out of luck.”