Source: The Real Estate Conversation
Now is the time for buyers to pounce on prime Perth real estate, amid a promising swell of activity, according to the latest Knight Frank’s Prime Global Cities Index – Q3 2018.
The Western Australia state of Perth is where those with deep pockets should park their cash, according to Knight Frank’s latest Prime Global Index.
The city, which just made the list of top 25 cities for prime residential price growth, saw a 48.2 per cent increase in the volume of prime residential sales between $3 and $10 million. Knight Frank analysts say this highlights the potential for strong price growth to follow suit.
Knight Frank’s Head of Residential, Australia Sarah Harding says investors should strike while the iron is hot.
“Now is the time to buy in Perth, with the volume of prime residential sales over the past 12 months priced between $3-10 million increasing by nearly 50 per cent, and taxes for foreign buyers to come into effect in January 2019,” she told WILLIAMS MEDIA.
Foreign purchasers are currently exempt from duty surcharges in Western Australia, but the State Government will introduce a 7 per cent Foreign Buyers Surcharge tax from 1 January 2019.
“The prime residential market often has a significant international bias in terms of buyer profile. Offshore interest in Australian prime residential property has remained steady over the past 18 months,” Ms Harding said.
“Australia remains a highly attractive proposition for global wealth, and more recently with the stronger US dollar, money can go much further than one year ago. We have seen this with global investors as well as Australians currently based offshore when buying with US dollars.
“There is still ever-growing demand from the global ultra-wealthy population to move their money into ‘safe-havens’ around the world and Australia is the third most-preferred global destination for emigration for the world’s wealthiest. However, foreign investment taxes introduced have encouraged more due diligence to be undertaken before transactions are made.”
Prime property resilient to the market downturn
The luxury property markets of three Australian capital cities have so far proven to be immune to the effects of the wider market downturn, according to Knight Frank’s latest Global Cities Prime Index.
The index, which tracks prime residential prices across 43 cities across the world, found four Australian cities monitored in the Index ranked in the top 25 for prime residential price growth over the year ending September 2018.
Sydney’s prime market grew 4 per cent over the year, followed by Brisbane (3.5 per cent), Melbourne (2.8 per cent), and Perth (2 per cent).
Knight Frank’s Head of Residential Research, Australia Michelle Ciesielski said buyers in the top end of the market (defined as the top 5 per cent of the housing market; essentially the most desirable and expensive property in each city) have been less impacted by tighter lending practices.
“Despite a cooling mainstream market off the back of tighter lending practices, Australian prime markets continue to experience growth with buyers less impacted by these measures.
“In Perth, the volume of prime residential sales priced between $3-10 million has increased by 48.2 per cent in the year to June 2018 – highlighting the potential for price growth to follow. In saying this, off the back of a record year, in Sydney, the volume of prime sales has pulled back by 22.3 per cent over the year to June 2018.
“In the super-prime $10 million+ bracket, the volume of Sydney properties sold has reduced by just 2.6 per cent – highlighting ongoing demand by ultra-high-net-worth-individuals.”
Perth’s median house price strengthening
The most recent figures from industry body the Real Estate Institute of Western Australia (REIWA) shows the median house price has lifted one per cent to $510,000 over the October quarter.
REIWA President Damian Collins said prices in Perth had started to strengthen after softening in winter following some particularly wet weather.
“In a city renowned for its sunshine, the Perth market tends to slow during the cold winter months. Thankfully, we’re well into spring now which has translated into renewed enthusiasm in the market with more sellers listing their property for sale and prices improving,” Mr Collins said.
More sellers have returned to the market, with a 7.8 per cent increase in listing stock, which Mr Collins says is in line with this time of the year.
“This is a seasonal trend that we’ve observed for a number of years now, even during the boom, with listings typically increasing in October and November as vendors become more motivated to sell in the lead up to Christmas,” Mr Collins said.