04.05.2023 Property News

Where’s The Fastest Growth In The Property Market?

Where’s The Fastest Growth In The Property Market?

We believe it is in prestige harbourfront homes in Sydney’s Eastern Suburbs.

High-end luxury properties are performing strongly in 2023, unaffected by high-interest rates and generally flatter property market conditions.

But the waterfront real estate market has outperformed even the prestige market as a whole.

We explore how and why waterfront properties are experiencing a record-breaking year.

The effects of tight supply

While the prestige market is performing well as a whole, the ultra-top-end waterfront has seen extraordinary growth. A lot of this comes down to limited supply.

By our estimates, there are probably only around 220 houses in the Eastern Suburbs that are truly ‘harbourside’ or right on the water. They’re tightly held because, even when the owner of a harbourside home receives a fantastic offer, they’re faced with the dilemma of where to go next. Because nothing matches up to their current residence, they often stay put.

Beyond that, the number of waterfront homes available is actually beginning to shrink. At the top end of the market, there has been a trend towards property amalgamations, which removes potential stock from the market. We’re also seeing owners make already luxury properties even more luxurious, upgrading and future-proofing them by installing lifts, excavating to create multi-car internal garages, and making other changes – such as building separate guest quarters. This means the owners can stay longer in their current home rather than having to downsize.

What’s driving demand?

But this tight supply is just one side of the equation. The other side of it is the incredible growth in demand at the top end of Sydney’s property market. In fact, Knight Frank’s Prime Residential Forecast puts Sydney in the top five cities for ultra-high-net-worth individuals looking to purchase in 2023.

In many ways, the prestige market operates independently of the broader property market. People looking in this segment tend to be cash buyers, so they’re typically unaffected by interest rate rises or tighter lending requirements. Instead, they’re more influenced by factors such as the relative strength of the Australian Dollar, stock market fluctuations, M&A activity and broader economic conditions. Right now, these seem to be working in favour of many prestige buyers.

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Recently, we’ve seen impressive headlines in the press like “Rich flippers defy the property downturn”. But the news goes beyond the headlines. We’re seeing this play out on the ground, with many high-end properties selling for up to double what their owners paid just a few years ago. Homes that were worth in the $20 million bracket just a few years ago are worth over $40 million today. Some are expected to eclipse $100 million.

Eastern Suburbs prestige hotspots

The suburb averages reflect this incredible price growth too. For instance, in Vaucluse, home to many waterfront houses, the median value of a five-bedroom house went from $5.988 million to $10.835 million over the past two years – a rise of 81%.

Nearby, in Bellevue Hill, the median value of five-bedroom homes lifted from $6.997 million to $10.1 million over the same period.

Meanwhile, Corelogic’s annual ‘Best of the Best Report’ for 2022, named harbourside Point Piper the most expensive market for apartments nationally, with a median sales price of $2,895,563.

While not on the harbour, in 2022, my team managed to break and set four new suburb price records: two in Centennial Park plus one in each of Randwick and Queens Park. We’re seeing that same strength at the top of the market continue into 2023 with several key sales to date.

Want more?

If you want to learn more about the Eastern Suburbs parkside property market, get in touch.