Source: The West Australian
Australia’s prime residential markets are moving at a different pace to its mainstream housing markets, according to Knight Frank’s Australian Prime Residential Review 2018.
The report defined prime property as the most desirable and expensive in a given location, making up the top five per cent of a given market by value.
Diverse key drivers influenced the differing rates of growth in prime and mainstream sectors, according to the report. The base of prime property demand followed wealth trends, rather than the dependence on growth in income that fuelled mainstream residential markets.
Despite trailing behind Melbourne, Sydney and Brisbane, Perth’s prime prices increased by 2.8 per cent between the March quarters of 2017 and 2018; this put it on the map globally, being the 21st best-performing city in this area.
Knight Frank WA Residential Project Marketing Director Neha Shah said she had personally seen momentum in Perth, with developments being a driving force.
“We’ve seen momentum in Perth, with residential transactions happening across the market,” she said.
“For example, Knight Frank recently launched Finbar’s Sabina Applecross apartments.
“The level of sales achieved so far have given Finbar enough confidence to initiate construction.
“I think there are multiple factors helping the Perth residential market to regain momentum overall, including a sentiment of opportunity in the market after a period of decline, and a belief that it is the right time to buy.
“In terms of those who are driving this trend in the prime market, it is downsizers selling their family homes and looking for upmarket apartments that offer lifestyle and amenities, as well as local buyers who are upsizing and taking advantage of certain opportunities – especially in the western suburbs, where prices previously hit hard.
“Across the market, investors and first homebuyers who have held off the market for a while are now believing it’s the time to buy.”
Knight Frank Australia Residential Research Head Michelle Ciesielski said Perth’s second consecutive quarter in annual positive growth territory was exceptional.
“The total number of prime sales transacted in the first quarter of 2018 was 29 per cent of the total achieved in 2017 – a strong result given not all settled sales would yet be included in this period,” she said.
It appears Perth is of interest to the wealthy, ranking 53rd out of 314 cities ultra-wealthy people are showing interest in, according to the report.
Peppermint Grove was the top-performing prime market suburb in the 2018 March quarter, with five-year capital growth of 14.5 per cent and a current median value of $3.1 million.
Looking ahead, Ms Shah said the current market trends were expected to continue, with growth in population and monetary movement contributing factors.
“We anticipate both the Perth prime and mainstream markets will start to see more positive growth,” she said.
“With more transactions occurring, we’ll start to see a growth in prices.
“We’re also seeing a growth in the ultra-wealthy population and an increase in business sentiment, which we anticipate will have a flow-on effect into property.”
Meanwhile, Knight Frank Residential Head Sarah Harding said Australia was performing well when it came to investor interest.
“According to Knight Frank’s latest Attitudes Survey, Australia is the third most preferred global destination for the world’s ultra-high net worth individuals planning to emigrate, behind the United Kingdom and United States,” she said.