Despite average punters paying thousands more in monthly mortgage costs, agents say there is no shortage of trophy home hunters with deep pockets.
The nation’s most expensive postcodes are resisting the real estate downturn as cashed-up buyers continue to compete for trophy mansions while other suburbs are squeezed by rising interest rates.
Analysis of price movements in the 98th percentile elite suburbs, typically inner and waterside suburbs around Melbourne and Sydney, are rising in value despite neighbouring areas being under pressure. Perth’s poshest waterside suburbs, such as Cottesloe and Nedlands, also continue to shine.
Toorak agent Antoinette Nido says she’s regularly contacted by buyers wanting “trophy” properties. 
Property specialists claim strong demand is being underwritten by cashed-up foreign buyers and expats, a shortage of supply and confidence that real estate is a resilient long-term investment.
“The ultra-high end of the market generally shows less cyclicality than other parts of the market, with buyer demand and homeowner sentiment more influenced by trends in business conditions, or financial and equities markets,” says Tim Lawless, research director of CoreLogic, which monitors property markets.
Median prices in the nation’s top two percentile areas range from around $4.65 million in Sydney to around $3 million in Melbourne, $1.9 million in Perth and about $1 million in Darwin, according to CoreLogic’s exclusive analysis.
In Melbourne, prices rose by around $30,000 to $3.1 million in the 12 months to the end of July while in Brisbane, the top-performing capital, they jumped about $350,000 to $2.1 million over the same period.
In greater Hobart, top-end prices bucked the slowing trend in other suburbs by rising nearly 14 per cent, or $187,000, to $1.5 million.
House prices in Sydney’s most expensive suburbs, which last calendar year surged by more than 25 per cent, slipped by around 0.2 per cent, or around $8000, in the 12 months to end-July. Apartment prices fell about 3 per cent, or $69,000.
Barrie Brown, an agent for Cassidy Real Estate, who has been selling properties in Sydney’s north shore since 1968, says prices for property around elite harbourside suburbs, such as Hunters Hill, which is in the 98th percentile, remain strong.
But buyers in lower-priced suburbs further west, such as North Ryde, where the median price for a house is around $2.3 million, are more vulnerable to the rising cost of living, due particularly to sharp interest rate rises.
The North Sydney council region, where prices dropped by about 10 per cent, includes suburbs ranging from harbourside Kirribilli, where the median property price is more than $3 million, to Crows Nest, where they sell for around $2.5 million.
Louise Barton, a team leader for Richardson & Wrench, specialising in properties in the area, says: “It has been a tricky market because it depends on investors and apartments. It’s very apartment-driven. The market pool is much smaller than other parts of the Sydney residential market.”
Analysts for leading financial service companies including ANZ and AMP are predicting property prices in the nation’s capitals will fall 18 to 20 per cent as sharp interest rates rises hit disposable income.
For example, an owner-occupier with a $1.5 million, 25-year, average principal-and-interest loan is paying about $1400 more than before the Reserve Bank of Australia started increased lending costs in May, according to analysis by RateCity, which monitors the cost of borrowing.
Monthly payments on that loan have risen to more than $8400 as average variable rates increased from 2.86 per cent to 4.61 per cent.
If the cash rate rises from 1.85 per cent to 2.6 per cent by November, as forecast by Commonwealth Bank, the same borrower’s monthly repayments would be more than $9000, a 29 per cent increase in seven months, RateCity analysis shows.
Lawless says: “Despite the weaker conditions, it is still quite rare to see the 98th percentile recording a year-on-year fall across any of the capital cities.”
In Melbourne, the strength in the top end of the market was this week revealed when a 26-year-old cryptocurrency casino founder, Edward Craven, spent a record $80 million to buy a derelict mansion in prestigious St Georges Road, Toorak, an elite postcode.
“The extreme top end of the market by value may prove to be a little more resilient due to less sensitivity to higher interest rates,” says Lawless.
Antoinette Nido, who sells top-end property in Melbourne’s Toorak for RT Edgar, says: “Buyers have been regularly contacting me saying they want to buy a trophy asset.”
That typically means a budget of around $30 million to $40 million, she says.
“These are not old-money families. They are people no one has ever heard about who have made millions by selling a business or from an initial public offering. They are convinced that prime real estate is a solid long-term investment,” Nido says.
“Anything that is on prime land is doing well,” she says.
Emma Bloom, a buyers’ agent in Melbourne’s top-end south-eastern suburbs, adds: “Top-end sales are going with gas. There are no bargain-basement sales. Supplies are low, which is keeping prices high.”
In Sydney, Martin Schiller, a sales agent for Savills specialising in Sydney properties ranging in value from $10 million to $30 million, adds: “The elite market is positive. There is strong demand and limited supply. Rising interest rates have had little impact at the elite end. Global uncertainty is a positive for Australian property because it encourages more people to emigrate or return home.”
In tropical north Queensland, Barbara Wolveridge, a director of Sotheby’s, has recently sold four islands off the coast of Port Douglas, at the top end of Queensland about 1700 kilometres north of Brisbane, for between $3 million and $8.5 million.
“Before COVID-19 it was very hard to sell islands – now it’s very easy. Some are resort-style, others like Gilligan’s Island [the setting for an American sitcom about a shipwreck],” Wolveridge says.
She is selling Pumpkin Island, around six hectares in size and about 14 kilometres off the Queensland coast, for between $20 million and $25 million.
Analysis by CoreLogic of Australia’s most expensive properties over the last five years shows increases in some cases of just over 100 per cent.
The popularity of Noosa Heads, about 135 kilometres north of Brisbane, soared during COVID-19 as cashed-up buyers not allowed to travel overseas invested in beach retreats, helping the median price to more than double to nearly $2.3 million.
Prices in Chandler, about 16 kilometres south-east of Brisbane’s central business district, was another popular destination for those moving from southern states seeking large suburban blocks and sunshine, pushing up prices by around 76 per cent to a median price of $2.4 million.
Adelaide’s inner northern suburb of Medindie, close to parkland and leading schools, was also a top performer with values rising more than 60 per cent to a median value of just over $2 million.
Perth’s prestigious seaside inner suburb of Cottesloe maintained its popularity with prices rising around 30 per cent to around $2.7 million.
Watsons Bay, another popular seaside suburb around 11 kilometres north east of Sydney, jumped about 19 per cent to a median of about $5.7 million.
Median prices in Darling Point, a luxury harbour address on the doorstep of Sydney’s CBD, increased only 5.6 per cent to just over $9 million.
Popular wealthy inner suburban beachside addresses like Brighton, around 13 kilometres south-east of Melbourne, only managed growth of about 3 per cent, taking the median price to $3.6 million.
But Toorak was hit hard by the pandemic and restrictions on property inspections, causing prices to tumble, despite improving demand. Median prices fell by about 2.5 per cent to just under $5 million.
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