Australia's luxury investment market is experiencing a significant boom, according to CBRE's Prestige Residential Valuer Insights Report for Q3 2024.
The report highlights strong demand for high-end residential properties, particularly in South Australia, Western Australia, Queensland, and New South Wales.
Local purchasers and upgraders are leading the charge, with downsizers, overseas purchasers, and interstate purchasers also remaining active.
Valuers expect house values to grow in the next year, with the highest growth anticipated in WA, SA, and NSW.
Apartment values and vacant land values are also expected to increase, driven by demand for premium properties.
The report underscores the importance of sustainable supply chains and the role of critical minerals in driving economic growth and job creation.
With the right investments and strategies, the report explains Australia can secure its position as a critical minerals powerhouse, contributing to global energy security and economic prosperity.
CBRE's new Prestige Residential Valuer Insights Report is part of a new series where they poll CBRE’s valuers who specialise in the valuation of high-end residential properties across Australia. For Q3 2024, its valuers reported:
- Demand has been moderate/strong: 5x as many Valuers (42%) see ‘strong’ to ‘very strong’ demand compared to ‘soft’ or ‘very limited’ in the luxury market. 51% of Valuers reported ‘moderate’ demand. Demand was strongest in SA and WA followed by QLD and NSW, with softer demand evident in VIC.
- Demand by property type: Valuers see demand strongest for houses valued up to $10 million and houses valued between $10-$20 million. Conditions are softer on vacant land.
- Local purchasers/ upgraders: The most active buyer types were local purchasers and upgraders. Downsizers, overseas buyers, and interstate buyers remain active. Developers are less active.
- House values next 12 months: 54% of Valuers expect house value growth in the next year, with 17% predicting price growth of over 5%. The highest growth is expected in WA, SA, and NSW.
- Apartment values next 12 months: 41% of Valuers predict an increase in apartment values, 17% expect growth of more than 5%. The highest growth is anticipated in WA and SA.
- Vacant land values next 12 months: 37% of Valuers anticipate an increase in vacant land values with 19% expecting an increase of more than 5%. Most growth is expected in WA, SA, and NSW.
- Future demand: Twice as many Valuers expect demand to increase in the next 12 months than decrease. The strongest demand is expected in NSW and WA.
- Future supply (listings): Most Valuers (63%) predict a slight increase in listings in the next 12 months. 34% of Valuers expect listings to remain stable. None expect a significant increase (i.e., oversupply).
The luxury investment market in Australia is showing signs of strength, with a significant portion of valuers reporting strong demand, particularly for high-end houses.
One potential challenge in the luxury property market is the limited availability of high-end properties, which could lead to increased competition and bidding wars among buyers.
Additionally, economic fluctuations or changes in government policies could impact buyer confidence and influence investment decisions.
Furthermore, the reliance on local and overseas buyers means that any shifts in housing preferences or restrictions on foreign investments could also affect market dynamics.
For example, the 2018 Chinese government ban on foreign investment in residential real estate has had a significant impact on the luxury property market in some cities.
To mitigate these challenges, developers and investors could focus on diversifying their portfolios to include a mix of property types and price ranges, reducing reliance on any single market segment.
Building relationships with international buyers and offering tailored incentives or flexible financing options can also help attract a broader range of investors.
Additionally, staying informed about potential regulatory changes and adapting strategies accordingly will ensure that market participants remain resilient in the face of economic or policy shifts.