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Competition heats up in Perth luxury market

According to the results of Knight Frank’s Prime Global Cities Index Q2 2020 report, the Perth luxury residential market performed strongly against a list of 45 cities worldwide from April to June.

Perth was ranked 12th in terms of price growth in the luxury market, with 2.3 per cent growth for the three months to June and three per cent for the year to June.

The west was joined by other Australian cities, with the Gold Coast rounding off the top 10 ranked by 12-month change, followed by Sydney (ranked 11), Brisbane (16) and Melbourne (24).

However, for the past quarter, Perth recorded the strongest growth out of the cities listed, with its growth in the three months to June 1.1 per cent higher than second placed Gold Coast.

“Globally, the Prime Global Cities Index has reached its lowest rate of annual growth since the last quarter of 2009, when the world was in the grip of the global financial crisis,” Knight Frank Head of Residential Research Australia Michelle Ciesielski said.

“The relatively strong performance of Australian cities was a result of the shallow number of listings, keeping property prices firm, and by global comparison we have largely escaped the major impact of COVID-19.”

Referencing the continued shortening of stock in Western Australia since the June quarter, Ray White Dalkeith Claremont Director Vivien Yap said prices had grown in the luxury market as a result.

“Good properties are hard to come by, and get snapped up quickly,” she said.

“So the competitiveness between buyers is the driving force in creating a higher price point.

“It is not surprising, because there is such a shortage of stock at the moment.”

Ms Yap has been using this to her and her client’s benefit, using the online auction platform Openn Negotiation to encourage competition between buyers.

Ms Yap said a recent home she sold in Mount Claremont was a beneficiary of this process, as buyer feedback placed the property around the $3 million mark, but competition forced the price up.

“We had five people pushing to buy that property – this was during lockdown – and we still managed to achieve $3.525 million for that property, when buyers started off at 2.7 million,” she said.

Ms Yap said while shortage of stock was helping to drive growth, property’s still benefited from being unique, having a good floor plan and being in a good location.

“I believe the growth will continue at this point in time,” she said. “This is what I am seeing in my current marketplace.”

The top performing city in Knight Frank’s Prime Global Cities Index Q2 2020 was Manila, with annual luxury residential price growth of 14.4 per cent, followed by Tokyo (8.6 per cent) and Stockholm (4.4 per cent).

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