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What’s in store for the luxury property market in Sydney for 2018?
It can be challenging to predict what will happen in any property market, yet it’s the question that all real estate agents get asked the most. By studying the previous year’s performance and current growth drivers we can get some indication on what may lie ahead. The first quarter’s performance also shows vendor and buyer sentiment after the summer break. Let’s see if the stats are a positive sign of what’s to come in 2018.
2017 was a great year for the luxury property market in Australia. Despite a slow down of price growth across Sydney generally, the top-end property market recorded an impressive 10.7% annual growth, according to Knight Frank’s 2018 Wealth Report. Sydney has now joined the top 10 fastest growing prestige property markets in the world as ranked by Prime International Residential Index.
Brad Pillinger, from Pillinger, comments that “There are in fact two cycles in Sydney …. lower and middle, and the top-end. I think they relate to each other without be perfectly aligned.” There is a difference between the two markets as Domain Group reported that Sydney’s overall median house price grew by just 4% in 2017. This also suggests that the price gap between the two Sydney property markets is widening.
At the top-end we have seen a change in the buyer profile with the top 10 luxury residential property sales of 2017 going to local buyers. After China introduced the 4% extra stamp duty surcharge for foreign buyers last July, according to the popular Chinese property website Juwai.com. there have been fewer searches for Sydney real estate. This trend for more expat and local buying power is, therefore, likely to continue throughout 2018.
The main drivers for growth in 2018 are a continuation from last year:
Sustained low interest rates
Low supply for top-end properties as people choose to hold on to their homes
A surging local economy with strong business confidence
10% rise in the global ultra-wealthy population in 2017 (US$50million or more) (Knight Frank 2018 Wealth Report)
China’s ultra-wealthy population will more than double in the next 5 years (Wealth-X)
Property in the top 5% also tends to be discretionary transaction driven so this will continue to create price premiums.
In terms of Pillinger’s sales, 2018 could not have started better on both sides of the harbour with the sale of the Joe Hockey’s residence in Hunters Hill and Ben & Tiffany’s and Simon and Jessica Tilley’s residences in Point Piper. It shows there is still a strong appetite for luxury Sydney property.
We can’t wait to see what the rest of the year brings.