“Rightsizing” is having a moment in Australia, with movers increasingly seeking high-end living in luxury apartment buildings instead of in sprawling homes. But according to new research, several factors are causing this super-prime market to quickly contract.
Australians taking up residence in high-end, multi-unit dwellings are dominating the top 5 per cent of the country’s residential markets, Knight Frank reported.
The trend’s being keenly felt in the super-prime, $10 million-plus market, where sales in the first half of 2021 were almost eight times higher than the 10-year average.
But Knight Frank has warned that availability is drying up, with prices for new and established high-rise luxury apartments rising more than 30 per cent across the major cities since June 2015.
Supply issues impacting materials and skilled labour have slowed production of new super-prime multi-dwelling builds, according to Michelle Ciesielski, Knight Frank’s head of residential research. Meanwhile, sites of development potential appeared to be evaporating.
By their estimates, the number of new, high-end apartments in the pipeline will decrease by 39 per cent over the next three years, placing even greater upward pressure on prices.
“The shortage of suitable product, particularly at the top-end of the market where rightsizers play, has been exacerbated by developers unable to easily secure sites in prime locations adding to the highly pressurised buying environment across Australian cities,” Ms Ciesielski said.
Concurrently, demand has continued apace. “Rightsizers have remained active in the Australian property market over the past year, with prestige sales data highlighting the continually increasing appetite of buyers for both primary and secondary homes,” she said before cautioning that multiple factors needed to be addressed to alleviate pressure in the sub-sector.
“The widening gap between this buyer demand and appropriate property supply remains concerning, and residential construction difficulties continue to delay delivery of new product.”
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Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.