3 of Australia’s cities record greater than global average prime price growth

Australia’s response to the pandemic has been markedly different to that experienced during the GFC. Annual growth of 2.2% was recorded across the prime residential markets of Australia in 2020, compared to -2.4% in 2009 – both years receiving significant economic stimulus from the federal government.

Wealth trends

Ultra-high-net-worth individuals (UHNWIs) grew by 10.9% in 2020, to 3,124 Australians with net wealth of US$30m+. This UHNW population is forecast to grow annually by 3.8% over the next five years.

Prime sales performance

Across Australia’s prime regions, the volume of sales in Q4 2020 tallied at 1,224 prime properties; the highest quarter on record. This was 38% higher than Q3 2020, and up 44% in the year ending December 2020.

The average days on market for a prime property in Australia was 124 days in Q4 2020. This was 122 days one quarter ago.

Prime price performance

Capital growth for prime property rose 2.2% over the past year to December 2020, rising 2.1% in the last quarter. This prime annual growth was led by Perth (3.6%), Gold Coast (3.2%) and Brisbane (2.5%). Sydney followed (1.1%) then Melbourne (0.2%).

Knight Frank Research forecast prime prices to further increase in Sydney, Perth and Gold Coast by a minimum of 3%, Brisbane at 2% and Melbourne at 1% by the end of 2021.

In terms of relative value at this time, one could buy 45 sqm of internal luxury floorspace in Sydney for US$1 million, 87 sqm in Melbourne, 103 sqm in Perth, 109 sqm in Brisbane and 126 sqm on the Gold Coast. Globally, this is limited to 31 sqm in London or 23 sqm in Hong Kong SAR.

Prime rental performance

Gross rental yields for Australian prime property trended down 3 bps to 2.67% in Q4 2020. A year ago, this yield was recorded at 2.68%.

In Q4 2020, rental growth was up 1.0% for prime properties in Australia. Over the past year, rental growth increased by 2.2%.

New prime development pipeline

A total of 26,700 medium- and high-density new apartments and townhouses were completed in Australia’s prime regions in 2020.

This was 4% below the number built in 2019 but slightly above the 3-year average of 26,425 new apartments and townhouses.

Compared to 2020, there are 42% less apartments and townhouses forecast in 2021, with 15,550 currently under construction.

In 2021, the greatest distribution of new apartments and townhouses will be in found in Melbourne (7,450), Sydney (2,825) and the Gold Coast (2,250). This is followed by Brisbane (1,850) and Perth (1,175).

Australian new prime apartment prices have increased 6.7% in 2020 to an indicative $23,800/sqm; to range between an average of $12,500/sqm and $65,000/sqm.

How did each major city perform? Read our latest Australian Prime Residential Review here.