SYDNEY is forecast to be the strongest prime property market globally for 2021, with the recent lockdown having limited impact on this segment of the market.
According to the latest research from Knight Frank, globally luxury residential prices are expected to increase at a faster rate than forecast six months ago, with Sydney expected to rise by 10% over the year.
In 2022 London will share the top ranking with Sydney, with both cities expected to record a 7% increase in prime residential prices.
Over Knight Frank’s three prime price forecasts since the onset of the pandemic, the forecasted increase has come in higher each time.
In May of last year, a 1% rise was anticipated for 2021, this climbed to 3% in December and as of July 2021 the average increase is 4%.
The initial forecast for Sydney in 2021 was reported at a 3% rise in December of 2020, with the most dramatic lift to 10% now, with government fiscal supports among measures supporting the market.
“Government fiscal stimulus measures have been revised upwards, protecting jobs and incomes via furlough schemes meaning there have been few forced property sales. Banks in key developed markets offered mortgage holidays to customers reducing repossessions and foreclosures,” said Kate Everett-Allen, head of international residential research at Knight Frank.
This was largely a result of closed international borders leaving affluent Australians to buy at home rather than abroad, with 1,429 prime sales recorded in the first quarter of 2021. This is the highest quarterly sales volume in the prime market on record, with the recent lockdowns having little impact on this segment.
“Households accrued a total of over US$5 trillion globally in savings during lockdown, enabling some homeowners to undertake home improvements but others have opted to relocate, upsize, downsize or buy a second home/investment property,” said Everett-Allen.
A recent 664sqm Mosman property sold in Sydney’s prime residential market, for an undisclosed amount amount above the $10 million price tag.
The 494sqm six-bedroom home in Balmoral, sits 800 metres from the Mosman village shops and a short walk to the bush track to the Balmoral Beach and sold ahead of the 3 August conclusion of the expressions of interest campaign.
Stone real estate agents Bruce N. Huang and Marize Bellomo, fielded 72 enquiries, with 18 groups taken through and three contracts taken, before the property broke lockdown expectations and a street record.
“Prime markets have arguably operated against a more challenging backdrop during the pandemic than mainstream housing markets due to their strong international bias and the stringent travel bans put in place.”
Forecasts for prime residential markets will depend on a variety of factors, most significantly the easing of travel restrictions.
With low stock levels underpinning prices, wellness and sustainability of a city and accrued household savings all boosting markets.
While the further spread of the Delta variant, slow vaccine rollouts and vaccine protectionism, higher taxes and cooling measures and rising interest rates, stymieing prime markets.