Small cities are world beaters

The smaller Australian capitals were among the world’s strongest performing ­cities in real estate last year.

163-179 The Scenic Road, Killcare Heights in NSW. Picture: Supplied.

The smaller Australian capitals of Perth and Brisbane, as well as the Gold Coast, were among the world’s strongest performing ­cities in real estate last year, recording annual residential price growth higher than the global ­average of 1.9 per cent.

Sydney and Melbourne, given their high price growth amid the pandemic last year, also made the cut and were included in Knight Frank’s global list of prime residential hot spots.

Perth was the top-ranked Australian city, coming in at No 34 out of the list of 65 top cities.

Tracking the movement of luxury residential prices across the world’s top 100 residential markets, the Knight Frank report found Perth produced 3.6 per cent annual growth, up from 0.9 per cent a year earlier.

The Gold Coast produced annual growth of 3.2 per cent, followed by Brisbane with 2.5 per cent price growth, while Sydney came in at No 56. Melbourne came in on par with Oslo with 0.9 per cent growth.

“Globally, prime residential prices performed better than expected in 2020, with markets having to weather the global pan­demic and associated economic turmoil,” said Knight Frank’s head of residential research, ­Michelle Ciesielski.

“Perth was Australia’s frontrunner for luxury residential price growth over 2020. Sydney recorded its highest volume of prime sales ever in the third quarter of last year and preliminary data is indicating the fourth quarter surpassed this.”

Due to COVID-19, 29 per cent of locations recorded price declines year on year, up from 21 per cent in 2019. However, five markets also registered double-digit price growth in 2020, compared with only two the previous year.

“Grounded by travel bans, Australia’s luxury buyers focused on building their property port­folios at home, buoyed in part by the country’s bullish stockmarket and historically low interest rate environment,” Ms Ciesielski said.

Knight Frank’s head of residential, Shayne Harris, predicted that demand for luxury property in Australia would continue to be strong.

“Property prices in Perth are coming off the back of several years of price decline. But recently population growth has improved with prospering mining activity and resilient commodity prices, and this has led to a strong rebound in the residential market,” Mr Harris said.

“Given Perth is Australia’s fourth-largest city we believe it is undervalued for its population and growth will continue to be significant.

“The pandemic has forced many to retreat in the comfort of their home for the best part of 2020, so it’s not surprising prime property is becoming increasingly more attractive in destinations known for their lifestyles such as Perth, the Gold Coast and ­Brisbane.

“On average, 22 per cent of the wealth of Australian ultra-high-net-worth individuals (someone with a net worth of more than $US30m, including their primary residence) is directly allocated to property for their principal and second homes, where they and their families spend time, while on average 24 per cent is directly allocated to a property investment portfolio.

“Australia’s ultra-wealthy are most likely to buy a new home ­locally, followed by purchasing a second home in the US, New ­Zealand, the UK, then Israel, while ultra-high-net-worths from overseas list Australia as a No 3 destination, behind the UK and US.”

Most ultra-high-net-worth Australian buyers wanted plenty of outdoor space coupled with leisure facilities and amenities, Knight Frank said.

“In Sydney, it’s the super prime property market — those sales exceeding $10m — which is driving up the overall prime performance as we see our ultra-wealthy clients upgrading the family’s main residence and buying new holiday homes as international travel is likely to remain subdued in the coming years,” Mr Harris said.

On NSW’s central coast, high-net-worth buyers are expected to flock to a large acreage property, Panamuna Pavilion, next door to Bells at Killcare.

Selling agent Cathy Baker of Belle Central Coast expects high-net-worth individuals to flock to the The Scenic Road, Killcare Heights property, which sports a pool, tennis court and two-bedroom guesthouse that returns more than $100,000 a year in rentals.

Ms Baker is targeting the marketing of the 2.75ha property, which is surrounded by the Bouddi National Park, at residents of Sydney’s wealthier suburbs, including Mosman and the eastern suburbs, who are looking for a holiday bolt hole.

She expects offers above $12m for the property, which would be a record for the Central Coast.

The co-selling agent for the property is Christie’s International’s Darren Curtis.