Prestige property price growth picks up pace in March quarter: Knight Frank report

Prestige property prices are picking up as well-heeled home-buyers take advantage of low interest rates to upgrade their living arrangements.

Spacious homes with every amenity are in hot demand as buyers plan to work from home and prepare for the chance of having to quarantine again.

Prices rose at a faster pace in the March quarter than the December quarter for each of the prime property markets – defined as the upper 5 per cent of the market – included in Knight Frank’s latest Prime Global Cities Index.

Sydney prime property prices rose 1.9 per cent in three months, up from 1.1 per cent in the previous three months, Knight Frank said.

The Melbourne prime market lifted at a more modest 0.4 per cent in the March quarter, still double the 0.2 per cent in the prior quarter, the report found.

Growth was even stronger in Perth (up 4.1 per cent, from a prior 3.6 per cent), Brisbane (up 3.8 per cent, from 2.5 per cent) and the Gold Coast (up 3.5 per cent, from 3.2 per cent).

“We have recently witnessed some incredible record sales at the very top end of the market, although when charting annually, the prime market price growth is coming off a much higher base than the mainstream market,” Knight Frank head of residential research Michelle Ciesielski said.

“More prestige property buyers are leveraging the low interest rate environment encouraging them to diversify their portfolios with alternate assets.”

A string of trophy homes have changed hands as buyers and sellers look for the right home for their new normal.

Marshall White’s Marcus Chiminello has sold about $200 million worth of Melbourne prestige homes in seven weeks, more than half of which was sold off market.

“We have seen an unprecedented amount of turnover in Toorak in that $20 million-plus price point,” Mr Chiminello said.

“They are not buying these homes to show off. They are buying them to make sure they have got every conceivable amenity within their home.”

After Melbourne’s extended lockdown last year, owners were less willing to tolerate shortcomings in their accommodation, and looked for somewhere they could live, work and educate their children in the case of future stay-at-home orders, he said.

His sales above $20 million include the Toorak mansion of Boost Juice founders Janine and Jeff Allis, as well as houses sold by celebrity chef Shannon Bennett and the wealthy Stamoulis family in the same suburb.

Mr Chiminello expects the fast pace of transactions could ease a little from now, with the market to become more balanced.

Another recent sale of about $20 million was the grand family home at 7 Towers Road, sold by Kay & Burton’s Michael Gibson and Robert Fletcher.

The sellers were downsizers, while the buyers were moving in the other direction, Mr Gibson said.

The agency also handled the sale of a whole-floor penthouse at 29 Washington Street, which traded for between $14 million and $15 million after interest from three parties, to a buyer looking to live on one level.

“The price movement in 2021 has been significant,” Mr Gibson said. “The prices that we are achieving this year would not have been achieved last year.

“There has been an enormous amount of money go into lifestyle decisions.”

Some buyers have been spending more time on the Mornington Peninsula and downsizing in the city, he said, adding that, with stock levels low, quality homes were attracting multiple buyers.

Sydney’s prestige market has been busy, from the ritzy eastern suburbs to the traditional holiday home market of the northern beaches.

Media mogul Bruce McWilliam sold a Point Piper investment mansion for more than $32 million, and another in Bellevue Hill for more than $9 million, before turning up to bid on a three-storey house in Woollahra and missing out.

His real estate agent, Brad Pillinger of Pillinger, said prestige property in Sydney had been highly sought-after compared to cities elsewhere in the world during the coronavirus pandemic.

“We have the perfect storm for price growth, particularly at the prestige end,” he said. “It is simply low supply and high demand. Money is cheap and easily obtained, stock levels are low as business recovery has been rapid and mortgage stress is minimal.”

Not to be outdone, expat lawyer Sarah Cooke sold a Point Piper trophy home for about $40 million, while Sydney Football Club chairman Scott Barlow and his wife Alina sold their non-waterfront home in Point Piper for about $40 million.

Even a boat shed in the exclusive suburb sold for close to $40 million within just a few weeks.

Ray White Double Bay’s Craig Pontey described Sydney’s top-end market as being “on fire”.

“Prices have been quite strong, there’s been big activity out there, there’s not been a lot of stock around and people are paying premiums for good properties,” he said.

Although buyers are always willing to pay a premium for quality, at the moment they seem to be paying a little more, he added.

“I think the market’s going to continue to be strong.”