How A Shortage Of Luxury Homes For Sale Is Driving Sydney’s Prestige Market
As Sydney’s prestige property market continues to go from strength to strength, a scarcity of luxury homes for sale is fuelling record sale prices.
Sydney’s prestige property market continues to perform strongly, and luxury homes in the eastern suburbs are more sought after than ever. The only problem is there are not enough of them on the market to meet buyer demand.
Sydney prestige property market update
The Sydney prestige market achieved its best-ever performance in 2021. According to NAB, a record 260 Sydney properties sold for more than $10 million last year, a 70% increase on the previous record set in 2020. Meanwhile, Knight Frank reports that Sydney saw a 16.2% increase in luxury residential prices in 2021.
Off the back of these results, the market has seen a strong start to 2022. It remained buoyant over summer and had already reported ten sales over $20 million by April.
Knight Frank’s Prime Global Cities Index, which ranks cities based on their luxury residential price growth over the last 12 months, listed Sydney at 9th place in the first quarter of 2022, a step up on its Q1 2021 ranking of 25th. The Knight Frank Prime International Residential Index reports that Sydney’s prestige real estate values saw an annual growth rate of 16.0% in the first quarter of 2022, compared to 1.9% at the same time last year.
NAB reports that the top 2 per cent of the market continues to outperform the broader Sydney market, with luxury home values increasing by 23.5% over the twelve months to April, compared to 20.6% for the overall market.
What’s happening in the prestige market in the eastern suburbs?
Sydney’s blue-chip suburbs saw values grow steeply over the year to March, and of the top 10 performing prestige suburbs, six were here in the east.
While the median Sydney house price grew by 21 per cent between March 2021 and March 2022, Vaucluse’s median house price jumped by 42.8 per cent, according to the Sydney Morning Herald. Clovelly saw its median house price rise by 40.6 per cent, while Dover Heights rose 40.3 per cent, Rose Bay was up by 40.1 per cent, Woollahra increased by 39.8 per cent, North Bondi by 36.2 per cent, Bronte by 35.1 per cent and Double Bay by 31.1 per cent. Suburbs like Point Piper and Centennial Park have recorded too few house sales to register a median, but our sales of 24 Lang Road and 14 Lang Road this year set a new suburb price record for Centennial Park, beating the record we achieved in 2018 with the sale of 44-46 Lang Road.
What’s fuelling demand in the prestige market?
A defining feature of the luxury market this year has been a distinct lack of ultra-premium homes for sale, and this is driving growth across the upper end of the market. NAB reports that the scarcity of premium listings has led to intense competition between buyers, resulting in record prices.
While prestige houses remain highly sought after, ultra-premium apartments are also in demand from buyers looking to downsize. NAB reports that opulent penthouse apartments in boutique buildings have been selling for record prices. But, like prime houses, these too are hard to come by. So when downsizers can’t find a suitable new luxury home, they are instead opting to stay put and future-proof their current home by installing a lift, reconfiguring their home or widening hallways. This, in turn, is further tightening stock levels.
Knight Frank also credits the strength of the prestige market to a revaluation of housing needs (the appeal of the lifestyle property exploded thanks to lockdowns), relatively low-interest rates (despite recent rises), property’s appeal as an inflation hedge and wealth creation – there were 5 million new millionaires minted around the world in 2021.
Because demand for prime property is so high and supply so low, we’re seeing a ripple effect across the eastern suburbs. Once upon a time, high demand for prestige property in Bellevue Hill would perhaps spread to Vaucluse or Woollahra, but now it’s made its way to Centennial Park and the beaches, where record prices are being achieved for premium homes.
What’s next for the eastern suburbs’ prestige market?
As demand outstrips supply, experts predict Sydney’s premium market will continue to grow throughout 2022. Knight Frank forecasts Sydney prestige property prices will increase by 9 per cent this year. NAB, meanwhile, anticipates that the market will be further buoyed by the steady return of foreign buyers this year. It stands to reason; after all, the Sydney property market is highly regarded on a global scale.
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