Prestige property market falls
Source: ELITEAGENT.COM
Knight Frank research revealed that prime property prices, or the most expensive 5% of homes in a market, have dropped or are barely rising across major Australian cities.
According to the Knight Frank Prime Global Cities Index, Sydney prime property prices fell by 1.9% in the September quarter, while Brisbane was down 2.4%, the Gold Coast slipped 1.6%, and Perth lost 0.4%, The Sydney Morning Herald reported.
Melbourne prices saw a modest 0.7% growth.
Increasing interest rates may have dragged property prices down in the lower market and reduced how much money home buyers could borrow, but they had not affected top-end properties much, as many well-heeled buyers can buy a property without a mortgage.
Instead, the top-end property market can be impacted by the level of economic confidence and can also be asset-specific when buyers find a home they like.
“Where increased mortgage rates have stunted the growth within our mainstream residential markets since mid-year, the ongoing global economic uncertainty and the flow on to other asset classes within wealth portfolios, have only recently started to impact the prestige residential market,” said Michelle Ciesielski, Knight Frank head of residential research. “In saying that, the number of prestige homes listed for sale remains relatively low across the major Australian markets and the number of days listed for sale has continued to fall from 90 days at the end of 2021, to 68 days half-way through 2022.”
Australia’s collective prime residential prices dipped 1.2% in the third quarter but were still up 6% compared to a year ago, Ciesielski said.
Following the pandemic boom, prime prices across the cities were still higher compared to a year ago: Sydney was up 5.4%, Melbourne up 6.7%, Brisbane up 5.2%, Gold Coast up 11.3%, and Perth up 3.4%, SMH reported.
When it comes to the global ranking, Dubai ranked first after recording 88.8 % growth in 12 months, followed by Miami with 30.8%, and Tokyo with 17%.
Brad Pillinger, of the eponymous selling agency, said the volume of prestige homes for sale declined in Sydney, which had helped maintain prices.
Fewer homeowners were trading one residence for another, Pillinger said, adding that many of the homes for sale were listed because they were a deceased estate, and there were not many opportunistic sellers.
“It is a self-perpetuating thing in the sense that people selling have less confidence about buying an alternative,” he said.
The prestige market was the least affected by interest rate movements, Pillinger said, due to participants buying and selling based on individual circumstances such as marriages, separations, upsizing, or downsizing, SMH reported.
David Morrell, of Morrell and Koren, said that in Melbourne, the $5 million to $10 million bracket had an influx of new listings late in spring that would provide buyers with more options.
A number of properties in that price range has recently hit the market in South Yarra and Toorak, along with some more expensive offerings within the area, as well as in Brighton and on the Mornington Peninsula.
Some of those properties, Morell said, had been offered quietly off-market earlier, did not sell, and were now listed publicly to try to get a result before Christmas.
“There is so much choice for the limited buyers there,” he said. “They are not all going to sell.”
It was a different story for the more expensive homes though, Morell said, as the ultra-top runs a different drumbeat.
He added global financial markets had changed in the recent weeks, and many buyers were cautious but would still buy high-quality properties.
“This time last year everything was going nuts, people were trying to buy things before auction,” Morell told SMH. “It is a complete 180 this year.”
Source
Mina Martin, AustralianBroker | 11/11/2022