Australia’s luxury property market has gone from strength to strength over the last 10 years with Sydney leading the way.
According to Ray White, across the country, median-priced houses increased 78% over the past 10 years while luxury property, which means houses valued in the top 5%, more than doubled in value over the same period.
Luxury houses performed well right across Sydney, led by Leichhardt in the inner city and Pittwater where values increased 228% and 253% respectively, which was 30% higher than the average houses over the past decade.
Meanwhile, Sydney’s famous eastern suburbs also saw impressive gains, in what is an area well-known for its luxury property market.
Houses in the affluent suburbs of Vaucluse, Rose Bay, Darling Point and Point Piper increased 219% which translates to an outperformance of as much as $3 million versus the median-priced house in these suburbs.
At the same time, there were also strong levels of outperformance in the luxury unit markets compared to average-priced apartments.
According to Ray White, the role of units was traditionally to house those people who couldn’t afford a house, but as time has gone on, higher quality units have become better and are also suited to different demographics such as downsizers.
The suburbs for outperforming luxury units were again mostly located in Sydney’s Eastern Suburbs, led by Double Bay, Bellevue Hill, Bronte and Tamarama.
Across these suburbs, values have tripled in the past 10 years compared to the 154% increase in the average unit price in these same locations.
High end apartments in North Sydney and Mosman have also seen their values triple compared to the 165% increase for median-priced units.
According to Ray White, the reason for the strong outperformance of luxury property comes down to land value, renovation and a higher concentration of wealth in those households,
Property in some of the most expensive suburbs, which tend to be located close to water such as beaches, bays and rivers, typically see strong increases in land value. Land is scarce in the areas and increased demand through rising population numbers puts upward pressure on prices.
Properties with unique characteristics, such as a view or proximity to water, are also likely to have increased at an even higher rate.
Meanwhile, the renovation trend, which surged during and immediately after the pandemic, is another driver of luxury house price growth.
Ray White said that it is likely that a higher proportion of well-located luxury homes have been renovated than the rest of the market, putting upward pressure on values in those areas.
