It’s been a bumper twelve months for the property market, with the Sydney median dwelling price rising by 25.5% over the year to 31 January 2022.
Incredibly, the prestige sector performed even more strongly, recording its best-ever year in 2021. We take a look at what’s happening at the top end of the market and what we can expect in 2022.
Prestige market update
No matter which way you look at it, Sydney’s prestige property market had a big year in 2021. With more than 45 sales over $20 million, doubling the previous record set in 2018, and growth of 10.7 per cent over the year ending September 2021, it outperformed luxury markets in cities like Paris, London and New York.
A quick look at median prices in some of our prestige eastern suburbs tells the story. The median house price in Bronte rose by an unheard-of 59 per cent between February 2021 and January 2022, from $3,535,000 to $5,625,000, according to realestate.com.au.
In Tamarama, meanwhile, a median house would have cost you $5,550,000 in 2020; by January 2022, that median house price had spiked by an incredible 67.5 per cent to reach $9,300,000.
But it’s not just prestige houses that have been performing strongly. Sydney’s harbourside luxury apartments are now amongst the nation’s most expensive real estate, selling for record prices. Domain data shows that three-bedroom apartments in Elizabeth Bay – that is, the premium end of the market – now command a median price of $4,200,000, up from $3,650,000 in 2020.
Our prestige sales from late last year – ranging from spacious beachside family havens in Bronte to exclusive house-sized apartments and Torrens title terraces in Potts Point – demonstrate the breadth and depth of the eastern suburbs luxury market.
What are the factors at play in the prestige market in 2022?
One of the main drivers of the prestige market throughout 2021 was lifestyle, and this is a trend that’s carrying on into 2022. COVID lockdowns and travel restrictions made us all more focused on our quality of life at home, and demand for lifestyle properties has been booming. Whether they’re upsizing or downsizing, prestige buyers are seeking out that luxury lifestyle.
Another factor keeping the prestige market flourishing has been a lack of listings. The demand for premium properties is simply greater than the supply. That means that when a luxury abode does come onto the market, competition is strong.
And although interest rates are not a traditional driver of the prestige real estate market, some pundits, like the NAB, have named rock-bottom borrowing costs as one of the factors currently fuelling the sector. Other elements, like business confidence, the economy and the share market, need to be considered, too, as they can hold more sway over the premium real estate segment than they do over the mainstream market.
What’s in store for 2022?
While Sydney’s property market is heading into a more sustainable period of growth, the prestige sector is likely to continue to outperform the mainstream market. Knight Frank is forecasting a 9 per cent increase in Sydney’s prestige property prices this year.
Buyer demand, which was strong throughout 2021, is likely to ramp up even further now that international travel restrictions have been relaxed. While our borders were closed last year, activity from foreign buyers dropped to an all-time low, so there is undoubtedly pent-up demand amongst overseas buyers and ex-pats. Our harbourside eastern suburbs, like Potts Point and Elizabeth Bay, are traditionally popular with these buyers, and we expect them to be sought after this year.
We’re also likely to see increased activity from both premium investors and locals looking for a second home this year. After two years of shifting border and travel restrictions, the certainty of owning property on home soil has never been more attractive.
And coupled with the continued buyer demand, the ongoing lack of luxury listings will continue to fan the flames of the prestige market in 2022.
If you’re looking to buy, sell or invest in prestige real estate in Potts Point and surrounds, my team and I are here to help. Contact us today.