The property boom has officially gone bust, the notorious bubble, popped.
For some, it’s been a blood bath, for others, the downturn has finally brought them into the game. But for a select few, the bust hardly even happened.
While property prices continue to shrink across the country, one part of the market has been almost immune throughout the ordeal – the very top of the top end.
Peter Hanscomb, CEO Belle Property, claims prices in Australia’s luxury property market have continued to rise.
“It’s been very strong and, if anything, property prices have gone up and not down. It’s more active between the $10-$20 million bracket,” he says.
While supply is relatively low across the capital cities, there is no shortage of buyers ready to pounce on prestigious addresses.
His comments come after project marketers Knight Frank last week reported they had sold four luxury apartments valued at more than $40 million each in James Packer’s One Barangaroo tower in Sydney. At least two of the buyers were reportedly Australian.
It was earlier reported that a quarter of the 82 apartments, which start at $9.5 million each, had been pre-sold before their May 11 launch.
Unaffected by the recently tightened constraints around lending, Australia’s rich are still buying up properties where they can get them, Mr Hanscomb says.
“You won’t find many luxury apartments and when they do come on the market there’s a number of people who want to purchase them, and those people aren’t affected by the normal restraints like credit lending.
“If you’re talking about a $10 million buyer, they’re sophisticated borrowers, they’re not going online searching where to get a home loan. They’ve got established relationships.”
Four Australian capitals rank in the top 23 cities around the world for luxury residential price growth, according to the Knight Frank Prime Global Cities Index, released on Thursday.
The index, which tracks the movement in prime residential prices across the globe, showed that across 45 cities, Brisbane was ranked 14 for luxury price growth, followed by Sydney (18), Melbourne (22) and Perth (23).
This growth is only expected to continue in the coming years as the number of rich Australians – whose net worth is more than $US1 million ($1.445 million) – grows.
“Over the past five years, four millionaires were created every day in Sydney,” said Knight Frank’s head of residential research, Michelle Ciesielski. “This is expected to rise to 11 millionaires per day over the next five years.
“In Melbourne, we saw three millionaires created per day over the same period, with projections it will rise to seven millionaires a day over the next five years.
“Perth’s millionaire numbers are expected to double from two per day over the past five years, to four per day over the next five years, while for Brisbane the figures will triple from one to three millionaires being created every day.”
Knight Frank partner, Sarah Harding, highlighted the market’s immunity from the credit squeeze as a key reason it is tipped to grow.
“We have found the majority of buyers in the prestige market across the country are not under the same pressures experienced by those in the mainstream market of minimal wage growth and restrictions on finance from the banks,” she said.
Top-end buyers agent, David Morrell, says that the biggest drivers for selling aren’t affordability or market conditions. They’re personal.
“The two big drivers at the top end are death and divorce,” he says.
“Because when there’s a death or a divorce, the property has to be sold. Otherwise, they don’t need to sell and they’re happy to sit it out.”
The current market demand is being driven by “buyer fatigue” – buyers who are lowering their expectations to deal with the lack of supply, he says.
“Puffed-out buyers unconcerned by banks, interest rates or the comedy of political errors. They’re just getting on with it,” he says.
From what he has seen, it’s the sellers who are biding their time.
“If you’ve got a $10 million-plus house, would you sell with banking enquiry, Easter and then an election? No, you would go ‘this is too hard’.
“I go and knock on people’s doors, so to speak, and offer them millions of dollars more than what their house is worth and they laugh at me and say ‘David I don’t need it’.”
While in some cases the shortage of supply is creating a price hike, it’s important to remember that it’s a complex market says Luxury Listings CEO, Mark Williams.
“There are examples of both up and down, what we are finding is there is a lot less stock, there’s relatively the same number of buyers though,” he says.
“In some cases that is making prices go up, where you’ve got the money and it’s a home you want, price is not an impediment.”
This article originally appeared in The New Daily.