Ultra-wealthy Australians leading buying spree in city properties
A new report reveals that in the second year of the pandemic, ultra-wealthy Australians transferred their money back into their cities, largely via residential property purchases.
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With an entry price of $US34m Monaco is the world’s most expensive city to buy into, while Sydney is now on par with Los Angeles sporting an entry price point for the top 1 per cent of houses of $US6.3m.
Knight Frank’s just released The Wealth Report 2022 also reveals that on prices alone, the Gold Coast was the best performing Australian city with more than 17 per cent growth last year, outstripping Sydney which achieved 16 per cent growth and Melbourne with 9.4 per cent.
The Wealth Report 2022 also reveals that during the second year of the pandemic, ultra wealthy Australians – those identifying with a net wealth of US$30m or more – transferred their wealth back into Australian cities, largely through residential property purchases.
Knight Frank head of residential research Michelle Ciesielski said there had been a lot of attention on the idea that Covid-19 triggered an ongoing trend of Australians leaving cities for the regions.
“In fact, what we are now seeing is that ultra-wealthy Australians are transferring their wealth back to the cities whilst also investing in second homes,” she said.
“The use of second homes for longer periods was supercharged in 2021 as flexible working grew and homeowners looked to decamp for periods of time.”
Luxury homes emerged as the asset class of choice for ultra-high net worth individuals (UHNWI) last year in a rapid turnaround from 2020 levels.
More than 30 per cent of Australian UHNWIs bought a residential home last year, second behind Hong Kong with 37 per cent.
“The world has never been wealthier, and the role of residential property as a store of wealth has never been greater, with almost a third of the wealth held by UHNWIs being attributed to their primary and or secondary residences in 2021,” according to Knight Frank. “On average 32 per cent of Australian UHNWIs’ wealth is directly allocated to property for their principal and second homes where they and their family spend time.”
Ms Ciesielski said that after the lull at the beginning of the pandemic in early 2020 when housing markets ceased trading for months as populations grappled with uncertainty, there was an explosion in activity.
“In 2021 they started to race away as Australians accrued savings, vaccine rollouts gathered momentum and the global economic outlook began to improve.
“The high demand for luxury homes has seen a literal race for space, with ultra wealthy Australian buyers competing for large waterfront plots in Sydney, and large apartments with roof terraces, balconies or outdoor spaces.”
She said there was widespread concern that with significant lags in construction coupled with supply chain issues a premium on large luxury homes would be generated for some time to come.
Knight Frank identified 12 hotspot suburbs for further growth, and not surprisingly Byron Bay on the NSW north coast has the strongest growth forecast given the township’s health and wellbeing elements.
“There is always a lot of interest in which areas will emerge as the next in demand global ‘hot spots’ for buying activity – and our forecast analysis has identified Byron Bay,” Ms Ciesielski said.
“Our data shows Byron Bay having a price growth forecast of 30-35 per cent over the next five years, and competition for residential property continues to intensify as Byron Bay’s environmentally minded council has limited the number of new homes built over the past decade.”
Globally, Como in Italy is expected to grow 5-10 per cent over the next five years, Back Bay in Boston should achieve price growth of 15-20 per cent, and Verbier in the Swiss Alps is forecast to grow 10-20 per cent.
The report also found the top five countries where Asia-Pacific based UHNWIs planned to purchase a new home were the US, Australia, New Zealand, the UK and Singapore.
Originally published as Ultra-wealthy Australians leading buying spree in city properties
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