Wealthy buyers continue to be drawn to high-end Australian homes despite slowdown in housing price growth
Amid the housing downturn, Australia’s prime residential market is expected to post an average price growth of anywhere between 0 to 3 percent in 2019, according to new research from Knight Frank.
Prime residential properties have continued to attract the wealthy population with demand from them “outweighing” the limited supply being brought to both the established and new supply markets, the consultancy noted.
A lack of new supply will especially support Sydney, where prime prices are predicted to register a growth of 2 percent next year, while Melbourne prime prices will likely achieve a growth of 1 percent. The former commanded the highest premiums for prime waterfront homes this year.
Home price growth has become frosty in mainstream markets along the country’s east coast. Prime home price increases in Sydney and Melbourne slowed down to 1.9 percent and 0.8 percent, respectively, in the first nine months of 2018.
For perspective, the cities posted increases of 10.7 percent and 9.8 percent year-on-year, respectively, in 2017.
In Perth, prices remain subdued with a 0.7 percent rise seen in the first nine months of 2018, down from the 1.3 percent rise seen in 2017.
“However, sustained recovery in the commodity sector and the city’s relative cheaper housing prospects to its East Coast peers is starting to gain more attention,” Knight Frank stated.
Consultants named tighter lending conditions for buyers, foreign purchase restrictions, and capital controls in China as top dampeners of Australian home price growth this year. Buyers from the mainland has formed a major investor base for Australia in recent years.
Worldwide, the divergent performance of different market tiers will become more evident as affordability constraints deepen, analysts noted in Knight Frank’s Prime Global Forecast report.
“Whether driven by policy, supply or demand, we are seeing stronger mainstream sectors in some cities (Hong Kong, London) and stronger prime markets in others (Sydney),” they stated.
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