2021 has been an exceptional year for Sydney’s property market. In the 10 months to 21 October, the median dwelling price lifted 23.8%.
As I’ve previously mentioned, houses – as opposed to apartments – performed even better, rising 28.2%.
But, if that seems incredible, one market segment rose even more sharply than this: prestige property. We look at exactly what happened at the top end of the market and why.
Median prices in prestige areas and properties soar
To get an idea of just how strongly the premium market has performed, you only need to look at how the median price in many prestige suburbs has tracked this year.
For instance, between February 2021 and September 2021, Bronte’s median house rose 55%, from $3.475 million to $5.4 million, according to realestate.com.au data. Next door in Tamarama, the median house price lifted 58.2% from $5.45 million to $8.625 million.
It’s also interesting to note that Domain data shows that the median price of a three-bedroom apartment in Potts Point (i.e. the prestige end of the market) is now $4.85 million. This was up from a median price of $2.9 million in 2019 (the last time there was sufficient data to record a median).
Interest rates not really driving prestige sales
What is perhaps most fascinating about the prestige market is that, unlike many other segments, interest rates don’t really drive price growth – at least not as directly. It probably doesn’t come as any surprise to find out that not many people buy an $8 million penthouse with an 80% mortgage. Instead, other factors – such as business confidence, the economy and the sharemarket matter more.
Right now, more than anything, we’re finding its lifestyle that’s driving a lot of the sales in the prestige market. Since the pandemic, Sydney’s appeal as a lifestyle destination has grown and we’re seeing a lot of overseas interest in prestige homes here – most notably from ex-pats. We’re also seeing a lot of people trade up – or down in the case of luxury downsizers – with many finding this a good time to cash in on the value of their family home and make the next move in their property journey.
At the same time, we’re seeing a real shortage of properties that fit the bill for these discerning buyer groups. That means that when a prestige property does hit the market, it can be hotly contested.
What to expect going forward
As we near the end of 2021, the signs are that we are at a late stage in the growth cycle. I still believe that prices will grow over 2022, as do most economists. However, the huge energy that was so evident in the market in early-and-mid 2021 has slowly started to disappear and I think we’re heading for a period of more sustainable growth.
That’s a good thing because it levels the playing field between buyer and seller and means that people looking to move on – or get onto the property ladder for the first time – will have more chance of securing a place that suits them. It also may mean the RBA is more inclined to keep interest rates at their current level for longer than if the record growth continued.
But I also believe that the prestige market will again outperform the property market more generally over 2021. Although we’ve seen more stock hit the market in the final quarter of this year, there are still few prestige properties out there compared with other sections of the market.
Our recent prestige sales
Here are some of the prestige properties we’ve sold over late 2021.
51/8 Greenknowe Avenue, Elizabeth Bay. This luxury three-bedroom apartment offers sumptuous living in a celebrated complex, blessed with panoramic harbour views and vast entertainers’ terrace.
11/22 Wylde Street, Potts Point. Set in an exclusive security building by award-winning Winten Group, this house-size apartment set in a premier position offers views over Sydney Harbour. It sold for $5,350,000.
156 and 158 Victoria Street, Potts Point. These two Torrens title terraces were DA approved for impressive homes designed over 3 levels by Antoniades Architects.
25 St Thomas Street, Bronte. This freestanding two-level, four-bedroom family home is a spacious haven right near Bronte Beach with panoramic views across to both Bronte and Tamarama beaches. It sold for $10.1 million.
CT30/184 Forbes Street, Darlinghurst. This opulent four-bedroom residence in Darlinghurst’s iconic Horizon building sold for $6.6 million.
If you’re thinking of buying or selling, contact my team today.