Market For Prestige Properties Still Competitive
One segment of the market seemingly unaffected by any talk of a slowdown is prestige property in Sydney’s eastern suburbs.
Here, at the top end of the market, we’re still seeing healthy interest, strong competition and record sales. So what’s driving this phenomenon?
What counts as a prestige property?
What qualifies a property as ‘prestige’ is different in different local markets. In Sydney’s Eastern suburbs, one of the country’s most expensive real estate markets, we’re typically talking about properties priced over $4 million.
Outside of price, it is difficult to find a common defining characteristic of a prestige property. For instance, in Sydney’s east, the prestige market includes luxury Potts Point apartments with harbour views, designer terrace houses in Paddington, waterside retreats in places like Bondi, Vaucluse and Double Bay, and larger freestanding homes with a garden in suburbs such as Woollahra or Bellevue Hill.
The prestige market is growing
As Sydney grows and as more wealthy residents look to secure their next home, the size of its prestige market grows too. It also grows increasingly detached from the real estate market more generally.
According to figures from Domain, the Sydney wide median house price grew 4% over 2017. However, according to Wealth Report, Sydney’s prime market (classified as the top 5%) grew at more than double the Sydney rate at 10.7%.
In fact, Sydney now ranks ninth in the fastest growing prestige property markets in the world. Also representing Australia is Melbourne’s prestige market, which comes in at number 15.
What’s happening in the prestige market?
We’ve seen three trends in the prestige market in Sydney’s east over the past year.
- Strong competition. We’re seeing good interest in the prestige market with solid enquiry levels and multiple potential buyers for many properties.
- Many properties selling pre-auction. Around half of all eastern suburbs properties that went to auction in the first few months of 2018 sold pre-auction, according to Corelogic. This is reflected in our own statistics, with an average of 19 days on market per property. This was particularly true of the prestige market.
- A large number of properties selling off-market. Increasingly, prestige properties are selling off-market. Over the past 16 months, our team has sold 42% of all properties this way.
What’s driving the prestige market?
We’re seeing a lot of confidence and competition in the prestige market right now. Prestige properties generally attract buyers who are less affected by bank lending criteria, or interest rate fluctuations.
And it’s in the prestige market that two key demographics are coming head-to-head: upsizers who have received a good price for their home are meeting downsizers looking to make a lifestyle move.
As we wrote last year, this results in these two demographics driving up demand for all eastern suburbs properties over $4 million.
What has been selling?
Our recent prestige sales include:
38 Glenview Street, Paddington $4,200,000
27 Caledonia Street, Paddington $4,050,000
205 Sutherland Street, Paddington $4,475,000
25 Underwood Street, Paddington $7,000,000
71 York Road, Queens Park (price confidential)
The Agency is also seeing this same trend in other blue-chip Sydney locations, such as the lower north shore, where this co-listing for 111 Milson Road, Cremorne Point recently sold for $6,750,000.