A surge in demand for luxury property post-lockdown has supported Australia’s prestige markets, at varying speeds.
Sydney led the property price growth of five Australian cities, including Perth, Gold Coast, Brisbane and Melbourne, which ranked in the world’s top 26 for luxury residential performance over the year, according to the Knight Frank Prime Global Cities Index third-quarter results.
Sydney ranked 16 on the list with 2.3 per cent annual price growth, Perth ranked at 17th spot and 2.2 per cent growth, and the Gold Coast at 18 after recording 1.8 per cent growth.
Brisbane ranked 23rd with 1.1 per cent growth, and Melbourne 26 with 0.3 per cent.
Given the period of uncertainty, Knight Frank national head of residential Shayne Harris said high-end buyers are looking more favourably at luxury property, a reflection of what was seen following the Global Financial Crisis.
“As a result of the pandemic, more are likely to buy a second home to enhance their lifestyle and use as a retreat in the event of future outbreaks.
“We expect this to continue into the last quarter of the year, as each state economy strengthens,” Harris said.
The index increased by 1.6 per cent in the year to the third quarter, with 62 per cent of cities continuing to see prime prices increase year-on-year.
The index found, however, that the percentage of cities registering annual price declines is increasing, up to 28 per cent in the third quarter of this year from 23 per cent at the end of 2019.
Global cities index
|Rank||City||World Region||12-month change||3-month change|
|5||Seoul||Asia||7. 4 %||3.9%|
|6||Zurich||Europe||7. 3 %||1.9%|
|8||Los Angeles||North America||6.2%||2.7%|
|11||San Francisco||North America||5.5%||1.9%|
^ Knight Frank Prime Global Cities Index Q3 2020; ranked by annual % change.
The index, which tracks the movement in prime residential prices in local currency across 45 cities across the globe, is still registering prime price growth during the pandemic.
Prime property—known as the most expensive property in a location, is generally defined as the top 5 per cent of each market and often has an international bias with buyer profile.
The index notes that travel restrictions in place across much of the world have seen demand remain primarily domestic in nature.
Knight Frank’s head of residential research Australia Michelle Ciesielski said a surge in demand post-lockdown as luxury homeowners re-evaluate where they want to be and the type of property they want to live in has boosted sales and supported luxury prices across several prestige markets.
Although an increase has been seen in the percentage of cities recording annual price declines, Ciesielski noted that Australia has so far “bucked this trend”.
“[Even] Melbourne, which has had the most stringent lockdown of all the capitals, continuing to record positive annual growth,” she said.
“In fact, Sydney, Perth and the Gold Coast all recorded growth above the index’s average annual increase,” Ciesielski said.
“Once lockdown was eased, the prime property market was supported by an upward trajectory in the stock market, low- interest rates and ultra-wealthy money which remained at home.
“Most of Australia was fortunate to ease out of restrictions in time to take advantage of the idyllic spring selling season—the thin number of prime properties on the market had great exposure to the ultra-wealthy population who would have otherwise been returning from a European vacation.”
Countries considered to have efficiently handled the pandemic have moved higher in the rankings with Auckland (13 per cent) leading the index at number one.
The North America region was the strongest-performing world region this quarter, with three cities in the top ten annual rankings Toronto (8 per cent), Vancouver (7 per cent) and Los Angeles (6 per cent).
The index notes a number of “resilient cities” including Manila (10 per cent), Seoul (7 per cent), the Swiss cities of Zurich (7 per cent) and Geneva (6 per cent), as well as the recovery of Chinese cities Shenzhen (9 per cent) and Shanghai (6 per cent).