Australian cities continue to record luxury residential property price growth despite a slowdown globally

FOUR Australian cities have recorded positive growth in luxury residential property prices over the past year amidst a slowdown in growth globally, according to Knight Frank’s latest research.

Knight Frank’s Prime Global Cities Index (PGCI) Q2 2024, which tracks the movement of prime residential prices across 44 cities worldwide, found annual price growth had slowed from the 4.1% seen in Q1 to 2.6% in Q2.

The latest growth rate is well below the long-term average of 5.3%.

While 25% of markets recorded negative growth over the 12 months until the end of Q2 ((up from 18% of markets in Q4 2023), all the Australian cities ranked in the PGCI recorded positive growth, with Perth (3.7%) and Sydney (3.1%) recording above average annual growth.

The Knight Frank Prime Global Cities Index Q2 2024

Australian cities – ranked by annual % change

Of the 44 ranked cities around the globe, Manila recorded the highest annual growth for luxury residential property prices at 26%, followed by Mumbai (13%) and Delhi (10.8%)

The global slowdown in growth for luxury residential property prices points to the limits of affordability being reached in many markets, according to the PGCI Q2 report.

Global housing markets experienced a sharp decline in growth in late 2022 and early 2023, as rising interest rates increased mortgage costs. With earnings growth outperforming house prices and as the supply of stock for sale in most prime markets lagged demand, prices began to tick up again from mid 2023.

Knight Frank Global Head of Research Liam Bailey said: “The slowing in price growth this quarter across global prime markets reflects the fact that, without further stimulus from rate cuts, the bounce in market pricing we have seen over the past few quarters is running out of steam.

“The biggest influence on future price growth lies in the hands of central banks and their confidence to cut rates further over the next 12 months.”

Adam Ross, Associate Director at McGrath, Knight Frank’s partner in Australia, said Sydney’s prime market was performing well, particularly the super-prime market, of $10 million-plus properties.

“Growth in the super-prime segment of the Sydney market continues in 2024 as we face an ongoing lack of supply coupled with healthy levels of demand,” he said.

“In the calendar year of 2023 there were over 310 transactions recorded in excess of $10 million. “Looking at 2024 to date, we are three quarters of the way through and have just surpassed 150

transactions. Historically, there has always been a surge in sales as the year closes out but at this rate

it’s unlikely we will come close to last year’s volume due to the lack of supply.”