Waterfront Property Drives Prime Residential Market
One in three super-prime residential sales in Australia have been absolute waterfronts.
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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.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
Philip Lowe’s comments come amid property industry concerns about pressures on mortgage holders and rising rents
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Leaders in Australia’s property industry are calling on the RBA to hit the pause button on further interest rate rises following yesterday’s announcement to raise the cash rate to 4.1 percent.
CEO of the REINSW, Tim McKibbin, said it was time to let the 12 interest rate rises since May last year take effect.
“The REINSW would like to see the RBA hit pause and allow the 12 rate rises to date work their way through the economy. Property prices have rebounded because of supply and demand. I think that will continue with the rate rise,” said Mr McKibbin.
The Real Estate Institute of Australia today released its Housing Affordability Report for the March 2023 quarter which showed that in NSW, the proportion of family income required to meet the average loan repayments has risen to 55 percent, up from 44.5 percent a year ago.
Chief economist at Ray White, Nerida Conisbee, said while this latest increase would probably not push Australia into a recession, it had major implications for the housing market and the needs of ordinary Australians.
“As more countries head into recession, at this point, it does look like the RBA’s “narrow path” will get us through while taming inflation,” she said.
“In the meantime however, it is creating a headache for renters, buyers and new housing supply that is going to take many years to resolve.
“And every interest rate rise is extending that pain.”
In a speech to guests at Morgan Stanley’s Australia Summit released today, Governor Philip Lowe addressed the RBA board’s ‘narrow path’ approach, navigating continued economic growth while pushing inflation from its current level of 6.8 percent down to a more acceptable level of 2 to 3 percent.
“It is still possible to navigate this path and our ambition is to do so,” Mr Lowe said. “But it is a narrow path and likely to be a bumpy one, with risks on both sides.”
However, he said the alternative is persistent high inflation, which would do the national economy more damage in the longer term.
“If inflation stays high for too long, it will become ingrained in people’s expectations and high inflation will then be self-perpetuating,” he said. “As the historical experiences shows, the inevitable result of this would be even higher interest rates and, at some point, a larger increase in unemployment to get rid of the ingrained inflation.
“The Board’s priority is to do what it can to avoid this.”
While acknowledging that another rate rise would adversely affect many households, Mr Lowe said it was unavoidable if inflation was to be tamed.
“It is certainly true that if the Board had not lifted interest rates as it has done, some households would have avoided, for a short period, the financial pressures that come with higher mortgage rates,” he said.
“But this short-term gain would have been at a much higher medium-term cost. If we had not tightened monetary policy, the cost of living would be higher for longer. This would hurt all Australians and the functioning of our economy and would ultimately require even higher interest rates to bring inflation back down.
“So, as difficult as it is, the rise in interest rates is necessary to bring inflation back to target in a reasonable timeframe.”
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
