Waterfront Property Drives Prime Residential Market
One in three super-prime residential sales in Australia have been absolute waterfronts.
2 min
As an island nation, it should come as no surprise that Australian’s are more willing than most to pay a premium for waterfront property.
However, in Knight Frank’s Australian Waterfront Premium 2022 report, the results indicate waterfront real estate represents a substantial share of super-prime sales, with one in three of the 374 sold over the last year located on the absolute waterfront.
Knight Frank’s report includes properties worth more than $10 million.
According to the report, the most popular type of waterfront super-prime sale was harbourside, representing 64% of super-prime sales in the last year — up from the 48% in Q3 of 3030.
This is in line with the super-prime surge witnessed this year, which shows the market more than doubled its volume in the first three quarters of 2021.
Properties with coastal frontage represented 16% of total sales in 2021, followed by 13% on canal, and 7% on river.
Knight Frank Australia Head of Research Michelle Ciesielski said waterfront real estate was obviously finite and tightly held, driving demand, particularly in Sydney.
“Sydney has taken the top position for greatest average uplift in waterfront sales this year, rising by 13.5% in the last year to 119% in Q3 2021,” Ms Ciesielski said.
This likely reflects the increase in price premium attributed to waterfront properties in 2021, increasing by 14% in the last year to represent a 79% price premium on their inland equivalents.
Elsewhere in Melbourne, waterfront homes experienced enormous growth.
“Waterfront homes in Melbourne have experienced the strongest growth of the five major Australian cities, with the waterfront premium increasing from 30 per cent in Q3 2020 to 37% in Q3 2021,” Ms Ciesielski added.
Away from the major markets of Sydney and Melbourne, the prime markets in both Gold Coast and Perth continue to grow with the Gold Coast following Sydney at a premium of 71% in Q3 2021, representing a growth of 5% year-on-year, and Perth recording an average uplift of 67% at 9.5% year-on-year growth.
“Brisbane’s prime market has been dominated by interstate buyers and local upsizers who favour riverfront real estate in prestige suburbs, averaging a waterfront premium of 54 per cent at a 14 per cent uplift,” Ms Ciesielski said.
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Ray White’s chief economist outlines her predictions for housing market trends in 2024
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Ray White’s chief economist, Nerida Conisbee says property price growth will continue next year and mortgage holders will need to “survive until 2025” amid expectations of higher interest rates for longer.
Ms Conisbee said strong population growth and a housing supply shortage combatted the impact of rising interest rates in 2023, leading to unusually strong price growth during a rate hiking cycle. The latest CoreLogic data shows home values have increased by more than 10 percent in the year to date in Sydney, Brisbane and Perth. Among the regional markets, price growth has been strongest in regional South Australia with 8.6 percent growth and regional Queensland at 6.9 percent growth.
“As interest rates head close to peak, it is expected that price growth will continue. At this point, housing supply remains extremely low and many people that would be new home buyers are being pushed into the established market,” Ms Conisbee said. “Big jumps in rents are pushing more first home buyers into the market and population growth is continuing to be strong.”
Ms Conisbee said interest rates will be higher for longer due to sticky inflation. “… we are unlikely to see a rate cut until late 2024 or early 2025. This means mortgage holders need to survive until 2025, paying far more on their home loans than they did two years ago.”
Buyers in coastal areas currently have a window of opportunity to take advantage of softer prices, Ms Conisbee said. “Look out for beach house bargains over summer but you need to move quick. In many beachside holiday destinations, we saw a sharp rise in properties for sale and a corresponding fall in prices. This was driven by many pandemic driven holiday home purchases coming back on to the market.”
3 key housing market trends for 2024
Here are three of Ms Conisbee’s predictions for the key housing market trends of 2024.
Luxury apartment market to soar
Ms Conisbee said the types of apartments being built have changed dramatically amid more people choosing to live in apartments longer-term and Australia’s ageing population downsizing. “Demand is increasing for much larger, higher quality, more expensive developments. This has resulted in the most expensive apartments in Australia seeing price increases more than double those of an average priced apartment. This year, fewer apartments being built, growing population and a desire to live in some of Australia’s most sought-after inner urban areas will lead to a boom in luxury apartment demand.”
Homes to become even greener
The rising costs of energy and the health impacts of heat are two new factors driving interest in green homes, Ms Conisbee said. “Having a greener home utilising solar and batteries makes it cheaper to run air conditioning, heaters and pool pumps. We are heading into a particularly hot summer and having homes that are difficult to cool down makes them far more dangerous for the elderly and very young.”
More people living alone
For some time now, long-term social changes such as delayed marriage and an ageing population have led to more people living alone. However, Ms Conisbee points out that the pandemic also showed that many people prefer to live alone for lifestyle reasons. “Shorter term, the pandemic has shown that given the chance, many people prefer to live alone with a record increase in single-person households during the time. This trend may influence housing preferences, with a potential rise in demand for smaller dwellings and properties catering to individuals rather than traditional family units.”
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Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
