Australian luxury property has rocketed in the past decade but is cheap globally

The nation’s best homes and apartments may be cheap on a global scale but there have been big jumps across the past decade.

An artist’s impression of the view from One Circular Quay in Sydney. The amount of luxury real estate that buyers can get for their money has fallen by 33 per cent in the city.

Luxury residential property in Australia’s capital cities is much more affordable than in many other cities around the world, according to Knight Frank’s latest Wealth Report.

But despite the nation’s relative cheapness against the likes of Monaco, the report found the amount of luxury real estate that buyers can get for their money has fallen by 33 per cent in Sydney and 19 per cent in Melbourne across the past decade as prices have soared.

A combination of big-ticket mansion sales and the emergence of super-luxury apartment towers has bolstered the local market, and interest rate cuts also are expected to spur demand.

The report found $US1m ($1.6m) bought 67sq m of luxury real estate in Sydney in 2014, compared with 45sq m now. In Melbourne that money would have bought 109sq m 10 years ago compared with 87sq m now.

In Brisbane and on the Gold Coast the amount purchasers can buy for $US1m has fallen by 13 per cent and 25 per cent respectively in that period.

Knight Frank global head of research Liam Bailey said despite higher interest rates across the past four years in Australia, prime residential prices in the nation’s cities had largely remained on an upward trend.

“While buyers of the luxury real estate are less reliant on financing, the RBA’s decision to reduce rates at their recent February meeting signals a change in the market towards greater stabilisation and a strengthening of the economy,” Mr Bailey said.

“There is now improved sentiment and further rate cuts expected this year will restore momentum.”

But he warned to expect a “moderation of price growth in Australian luxury property markets over 2025”.

Mr Bailey cited factors including the federal election, ongoing geopolitical uncertainty and further interest rate cuts being unlikely until the second half of the year.

“Underlying this though – and supporting prices in the luxury real estate market – the stockmarket is buoyant, properties remain tightly held with higher demand than supply, and there is still a significant number of cash buyers seeking downsized homes,” he said.

Mr Bailey pointed to a split in the outlook for different markets across the country.

“This year Perth is again expected to lead luxury property price growth, with a 3 per cent predicted rise, followed by Brisbane and the Gold Coast with 2 per cent and Sydney at just 1 per cent. Melbourne prices are expected to remain flat,” he said.

Michelle Ciesielski, head of research at McGrath Estate Agents, Knight Frank’s partner in Australia, said the local market was more competitive on an international scale as the lower Australian dollar attracted expats to buy property back home.

For a local buying residential property with Australian dollars, prestige prices grew by 2.8 per cent in 2024 across Australia.

But those using US dollars bought at a rate 6.6 per cent cheaper over this time.

The currency advantage was as much as 7.2 per cent cheaper for those buying with Hong Kong dollars, 5.1 per cent with the British pound and 3.6 per cent with Singaporean dollars.

“We continue to experience growing buying activity with expats who are taking advantage of the favourable currency exchange, and the strongest demand remains in well-established lifestyle locations for when they eventually return home,” Ms Ciesielski said.

The Knight Frank report says prime residential prices had an upward trajectory globally in 2024, with an increase of 3.6 per cent, marginally up on the 3.3 per cent rise in 2023.

In Australia, Perth (5.3 per cent), Brisbane (4.1 per cent) and the Gold Coast (3.6 per cent) recorded luxury property price growth equal to or above the global average.

Originally published as Australian luxury property has rocketed in the past decade but is cheap globally