Luxury developments plunge but prices up

Photo: Note Viriyarat (Copyright Australian Property Journal)
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NEW prime apartment and townhouse developments Australia has fallen for the second year in a row, by 42% over 2021 but apartment prices soared with an average high of $65,000 per sqm.

According to Knight Frank’s Australian Prime Residential Q4 2021 report, there are currently 15,550 apartments and townhouses under construction, down 42% from 2020.

A total of 26,700 apartments and townhouses were completed in 2020, which was 4% below the number built in 2019, although it was slightly above the three-year average of 26,425.

Despite living enduring several lockdowns in 2021, Melbourne accounted for the lion share of new apartments and townhouses with 7,450 dwellings, more than double Sydney (2,825), Gold Coast (2,250), followed by Brisbane (1,850) and Perth (1,175).

Although new dwellings are down, new prime apartment prices increased by 3.2% in 2020 to an indicative to $25,500 per sqm; to range between an average $13,000 per sqm and $65,000 per sqm.

Sydney and the Gold Coast outperformed with prices rising by 10.6% and 10%, respectively.

Overall, Sydney was the strongest performing city for prime residential with annual price of growth of 10.7% whilst the Gold Coast saw the highest annual sales turnover, skyrocketing by 156% followed by Brisbane with 135%.

Meanwhile the volume of prime residential sales in Q3 2021 totalled 1,971, which was the second highest quarter on record.

Prime residential capital growth was 1.5% in the Q3 and are 9.1% higher than a year ago. However Australia’s prime price performance trended below the global average of 9.5%.

Although individually, some capital cities outperformed the global average, namely Sydney (10.7%); Gold Coast (10.5%) and Perth (10.4%).

Brisbane recorded a 8.4% growth and Melbourne’s prime gains were more modest at 6.5%.

Knight Frank is predicting prime prices will increase by 11% by the end of 2021 and a further 8% in 2022.

In terms of relative value, US$1 million could buy 87 sqm of internal luxury floorspace in Australia, much better value for money compared to global cities such as 31 sqm in London and 21 sqm in Hong Kong.

Sydney is not far behind the world’s most expensive cities, US$1 million can buy only 44 sqm of space.

Whereas on the Gold Coast, one could buy 124 sqm of prime floorspace, and 111 sqm in Brisbane, followed by Perth with 102 sqm and Melbourne (88 sqm).

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