With travel lanes opening and many global citizens looking to make their big move, it’s important to know what the property market is like. If you’re interested in purchasing prestige or luxe property while living in Australia, we’ve got you covered. Here are some insights on the prestige property in Melbourne, Sydney and Brisbane.
Lockdown in luxury: prestige property in Melbourne
With the start of 2022, a recap of 2021’s real estate market shows that while things were quiet for most of the year, the end of lockdown had sales picking back up. After all, if you’re expected to quarantine for almost two years, why not do it in style? A flurry of multi-million-dollar house sales broke records for price and turnover volume in the capital of Victoria. With cashed-up locals who have been unable to freely travel during the Pandemic, many in Melbourne have decided to lockdown in luxury.
One of the targeted suburbs is Toorak, an inner suburb of Melbourne located about five kilometres southeast of Melbourne’s Central Business District. It’s been long regarded as the best blue-chip suburb, with a more than 12 percent jump of its median price. With a new median price of $5.1 million in the past year, it’s without a doubt that the demand for luxe property has skyrocketed in Melbourne.
A big contributor to this jump was Chemist Warehouse mogul Sam Gance’s purchase of a $43 million Lansell Road home according to recent Domain reports.
Contributing factors
A big factor lends to basic economics – demand and supply. With a low supply of up and coming prestige property in Melbourne, these houses are garnering utmost attention as their owners sell up and move to other states. Queensland has recently recorded a significant net gain in interstate population according to ABS, unlike Victoria and New South Wales which have seen a fall instead.
Besides this, opportunists who have noticed the price drop of property during the pandemic are quick to take advantage of these prestige properties on the market. These transactions are also happening quietly behind closed doors, with off-market purchases and sales being mostly made.
Lastly, international buyers that have been moving to Melbourne are the third group of buyers. With travel lanes opening up internationally, many global citizens have seized the opportunity of market windfalls in Melbourne and plan to make an international move. (This will potentially be great news for Melbourne’s inner-city apartment market, which has taken a significant hit since borders closed.)
Rental growth
The rental market took a hard hit in Melbourne when international residents were forced to return to their home countries due to COVID-19. Vacancies were at a record high of 4.7 percent according to SQM during the peak of the pandemic in December 2020. However, by November 2021, this rate had fallen to only 3.2 percent. This offers tenants good bargaining opportunities. The rental market will probably continue to correct itself until the market reaches equilibrium. With the opening of travel lanes are international residents returning back to Melbourne, there will be a definite rise in the rental market.
A booming market: prestige property in Sydney
Unlike the slow-climbing Melbourne market, Sydney’s prestige property market is booming. It is o track to outperform other international luxury markets as seen by its significant 10 percent price growth witnessed in 2021 according to the AFR. With a huge demand outstripping the supply, prices for houses are climbing up quick. This means, not only should you be quicker than other prying buyers, but you should also carry a huge cheque.
While $2-3 million previously could land you a comfortable and luxurious property a few years back, it would be harder to find a house of the same quality today. Instead, you’d have to settle for a more run-of-the-mill property in a good neighbourhood. Currently, you should be looking at at least $5 million to look into the luxe end of property in Sydney. If you have your eyes set on the more eastern suburbs such as Bronte and Clovelly, a whopping $10 million would be the baseline for the market.
What drives demand?
According to specialist buyer’s agent Munro Donen at Propertybuyer, stock levels at this premium end in Sydney are thin while buyer numbers are high. These buyers are also mostly cashed up and ready to purchase at a moment’s notice. Local business owners, crypto investors and tech entrepreneurs are also flourishing in their careers and keen to purchase their dream luxe homes. Munro adds that there are even older country-based retirees looking to settle down in a luxury inner-Sydney apartment.
Buyers are moving fast on luxe listings in Sydney. The market is also, like Melbourne, being fuelled by international residents and expats returning back once travel lanes have opened. These cashed-up premium property purchasers are snapping up local offerings, which are comparatively good value when compared to overseas markets.
Australia’s flash pads are ticking all the right boxes for our wealthier buyers – COVID-friendly properties with space for working and studying at home and spending extended periods of recreational time without family members feeling crowded out of their personal space. Limited new-home construction, largely due to COVID lockdowns in the harbour city, is exacerbating value growth as demand puts upward pressure on price.
Rental growth
Similar to Melbourne, COVID-19 significantly impacted the rental market negatively when travel borders closed and international residents fled home. In some areas, such as Sydney’s prestige suburbs, vacancies were as bad as above 5 percent. Rental markets in cities like Brisbane, on the other hand, flourished instead due to southerners seeking refuge to escape COVID. The vacancy in Brisbane dipped to just 1.3 percent where it remains stagnant.
However, the Sydney market has gradually regained equilibrium. Over the course of this year, vacancies have trended downwards in a steady trajectory. Sydney’s market started 2021 with 3.6 percent, which is considered weak, and ended the year with 2.4 percent. If this stays consistent for 2022, we’ll see prices climb surely and quickly.
The luxury rental market has generally followed a similar trajectory to the general market. When, in late 2020, it was feared that overseas workers returning home would push up the vacancy rates, instead the market was supported by returning expat Aussies.
This trend pushed up demand, and, as a result, kept rental prices steady.
Booming markets: property prestige in Brisbane
The pandemic has left the Brisbane market in a once-in-a-generation property boom. With high prices and demand outpacing supply, Brisbane’s market is skyrocketing. Property booms tend to follow a few key trends and one of the first signs is when a rising prestige property market leads the way. Volumes pick up and prices edge higher when luxe listings sell like hotcakes.
What drives demand?
Once COVID-19 hit the world, the property market was influenced by the migration of people to regional centres as employees who could work remotely moved to satellite centres. These places gave them more escape from the lengthy, ongoing lockdowns. Thus, Brisbane’s property market saw growth while Melbourne and Sydney suffered.
A net of 43,000 Australians moved to regional areas from capital cities in 2020, the largest net inflow to the regions since data began in 2001. Regional Queensland had the biggest net inflow, with 17,000, of all the states. This trend of interstate immigration followed through to 2021, and probably to 2022.
Furthermore, wealthy interstate buyers have eyed off Queensland’s handling of the COVID crisis and sought to make the move north, relocating to a place where ongoing, interminable lockdowns are not a regular occurrence. The final group leading the charge for premium listings is the local buyer who, unable to travel overseas, is now looking to upgrade their home.
Properties that are the hot ticket items are those that are ‘pandemic-proof’, or that offer space that these work-from-home and study-from-home families need. These are properties that have separate his-and-hers offices, areas for kids to study and enough living space for families to escape each other while still living together.
Rental growth
Nationally, many rental markets are experiencing high vacancy rates. Supply is evaporating as investors offload to realise strong capital growth, selling to a cashed-up market of homebuyers. As a result of the shortage, rents are skyrocketing.
According to Domain, Brisbane’s median rents have risen 12.5 percent over the past 12 months alone, to reach $450 per week.
The luxury rental market is not insulated from this impact. As property owners seek to capitalise on unprecedented demand levels, we are seeing supply levels shrink.
Information and insight are from PropertyBuyers, Moovaz’s official partner. If you’re looking to buy a home or investment property in Australia, PropertyBuyers will research, evaluate and negotiate the property best suited for you and within your budget. You can also get local insider knowledge and accurate appraisals with a team of expert professionals in Australia. Get the latest property market predictions for 2022 here.
Feeling ready to make the big move?
Head over here to begin your journey
Or start ticking off your relocation checklist here
Still unsure?
Learn more about Australia here
Explore more destinations here