Australian Real Estate: Priority Luxury Properties for Wealthy Buyers vs. Affordable Apartments
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Developers are responding to a new trend of super elite apartments for wealthy buyers, putting homes even further beyond the reach of ordinary Australians.
Mega rich Australians are stuck inside the country amid border closures, so instead of looking further, they are looking up.
A new report shows that purchases of luxury apartments, especially lavish penthouses, have taken off in the past 18 months during the Covid-19 pandemic.
Super-prime apartments – which typically sell for at least $ 10 million – are sold eight times more than in the first half of this year compared to any other time.
Real estate consultancy Knight Frank released the report on Thursday, which found that “resizing” – a type of downsizing where cashed-in landlords swap a mansion for an upscale apartment – is becoming more and more common.
The trend is bad news for average Australians hoping to get a foothold in the property market.
To meet the growing needs of Australia’s ultra-wealthy population, developers are creating more and more luxury apartments, leaving most aspiring homeowners out in the cold.
“Across the pipeline development forecast, developers are increasingly responding to specific requests from duty regulators to include more luxury apartments configured with three bedrooms in their projects,” the report said.
Over the next three years, luxury three-bedroom apartments will account for 32% of new developments, compared to just 21% of projects built in 2018.
These apartments cost $ 10 million or more in Sydney and Melbourne and $ 7 million and more in Brisbane, Perth and the Gold Coast – well outside the price range of an ordinary Australian.
Last week, the Australian real estate market surpassed $ 9.1 trillion in value terms.
National home values ââhit an average of $ 719,209 in September, while units stand at $ 586,993, which is well below the average cost of a premium apartment.
Moreover, not only are the developers targeting this elite group, the report predicts that apartments will also be harder to find.
“Regarding, the pipeline of new apartments in prime areas around Australia will drop 39% over the next three years,” noted the report’s authors.
Purchases of luxury apartments have been boosted by the pandemic, especially in the past six months.
There have been an average of only 8.7 sales transactions of luxury apartments per year from 2011 to 2020, compared to 67 purchases so far this year alone.
A whopping 70 percent of those sales came from an apartment building in Sydney – Crown Residences at One Barangaroo.
On Thursday, coinciding with the very day the report was released, South Australia’s most expensive apartment went up for sale on the property market.
The 37-story Market Square tower penthouse in Adelaide’s CBD sells for $ 10 million.
For that amount, you get four bedrooms, four bathrooms, and sweeping views, with the company writing that it’s “comparable to penthouses in Paris and New York.”
The $ 10 million significantly breaks the state record, which was previously $ 5.5 million for a Realm Adelaide penthouse.
The report’s authors attribute the boom in the luxury apartment industry to three main reasons.
First, Australians want homes with low maintenance but plenty of space, described as “house-like proportions for entertaining”. A penthouse, or at least a very large and luxurious apartment, meets this criterion.
On top of that, those looking for a luxury residence want one that can be easily locked down and serviced when they leave for extended periods of international travel next year.
The last reason for the sudden boom was vacations. Australians increasingly buy a ‘co-main house’, where the second (holiday) house is almost equal in all respects to their main residence, especially in terms of comfort.
As demand has increased, so have prices. Prices for luxury apartments in high-rise buildings have increased by more than 30% in major cities since June 2015, according to the Knight Frank study.
Michelle Ciesielski, Head of Residential Research at Knight Frank, said: âThe shortage of suitable products, particularly in the high-end market where proofreaders play, has been exacerbated by developers unable to easily secure sites in locations. prime locations, adding to the highly pressurized shopping environment. in Australian cities.
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