Sydney real estate prices show no signs of slowing at the top end of the market as the ultra-wealthy go shopping.
Real state agency Frank Knight expects luxury property prices in the Harbour City to grow by 10% this year and 7% over 2022 in new forecasts published on Wednesday.
It ranks Sydney as the world’s hottest luxury market, outstripping other global cities including Hong Kong, Los Angeles, Paris, and New York.
Those same Australian properties were already ranked as some of the most expensive per square metre, despite Sydney’s relatively low population density.
In fact, Sydney is such an outlier that Miami, which is expected to grow just 6% this year, is ranked as the second-fastest growing city this year. Meanwhile, in 2022 only London is forecast to be able to keep pace. In the words of the agents actually selling these places, “it’s the hottest market I’ve ever seen”.
It marks the third time the real estate company has upgraded its forecasts for Sydney. According to its analysts, “closed borders have seen wealthy Australians purchase at home instead of abroad”, with a record 1,429 premium properties selling in the first three months of the year.
More broadly, it singles Sydney out as at the front of a trend being experienced worldwide, as extraordinary stimulus measures, including quantitative easing (QE) and record low interest rates, have helped drive up asset prices globally.
Multiple mortgage holidays in Australia and other developed markets have equally helped avoid forced sales, while the Morrison government’s HomeBuilder program has incentivised further spending in the residential market.
“Households accrued a total of over US$5 trillion globally in savings during lockdown, enabling some homeowners to undertake home improvements but others have opted to relocate, upsize, downsize or buy a second home [or] investment property,” head of international residential research Kate Everett-Allen said.
As elsewhere, wealthier Australians have reaped the benefits, with soaring stock valuations, bumper dividends and rising asset prices flowing disproportionately to the big end of town.
It has created a virtuous cycle, with the luxury market – characterised by the top 5% of sales – booming as a result.
The proof is in the pudding. In Australia, the median luxury sale price sits at around $5 million, with Sydney’s skewing higher still.
Sydneysiders looking to buy into the elite club can accordingly expect to shell out around $1 million more in two years time.
It’s enough to make the rest of the market seem almost reasonable.