AUSTRALIANS looking for a seachange and downsizers have propelled the Gold Coast to fifth on the global ladder for prime residential price growth. The glitter strip saw 11.3% growth over the year to the September quarter, according to Knight Frank’s latest edition of the Prime Global Cities Index. It comes as the COVID-induced demand prompted apartment supply to plummet to historic lows, and developers such as Gurner to plan and launch new ultra-luxe towers.
Melbourne came in 13th, with 6.7% growth, although those increases have stagnated in the past six months. There was a similar story in Sydney, which came in at 18th with 5.2%, Brisbane in 20th, also at 5.2%, and Perth, at 26th with 3.4%, with prices in the latter pair having fallen over the past six months. “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 Knight Frank head of residential research, Michelle Ciesielski, said of the Australian results.
Australia’s collective prime residential price growth was 6% over the year to September 2022, although fell 1.2% in the third quarter after 9.1% annual growth recorded a year ago.
The number of prestige homes listed for sale remains relatively low across the major Australian markets, while 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. However, the rate of change for prestige sales volume slowed down collectively across Australia, although it was still 9.8% higher in the second quarter of 2022 and increased 27.1% over the year to this time. “As a result, we may start to see the number of days on market increase over the coming year with price growth to follow,” Ciesielski.
Globally, 7.5%, annual growth still sits above the index’s average five-year growth rate of 4.4%, and the number of cities registering year-on-year price falls has only shifted from six last quarter to seven this quarter. However, 19 cities saw prime prices decline between June and September, up from seven in the March quarter. Markets that saw some of the strongest price rises during the pandemic were well-represented amongst this group, such as San Francisco, Toronto, Wellington, Stockholm, Vancouver, Los Angeles, Seoul, as well as some Chinese mainland cities. Resilient labour markets, a lack of supply and well capitalised lenders will support prime prices in most markets into 2023, according to the report.
“However, the transition out of a sustained period of low lending rates will lead to pinch points in some markets, particularly amongst highly-leveraged prime landlords, potentially adding to stock levels in some cities.” Leading all comers was Dubai, with astronomical annual growth of 88.8%, followed by Miami with 30.8%. Tokyo (17.0%), Los Angeles (13.6%) and Zurich (10.7%) were the only other cities to record double digit growth, although not far behind were Edinburgh, Berlin, Seoul, Taipei and Dublin. Wellington was at the bottom of the list, with 18% lost over the past year, nearly double the next-weakest performer which was Frankfurt with a 9.4% fall.