Upward pressure on the top end of the market looks likely to continue with a 39 per cent fall in the number of new luxury apartment projects predicted over the next three years.
The Rightsizing Report by Knight Frank showed pipeline constraints for properties above $2 million to $3 million would be most felt in Brisbane and Sydney.
Perth and the Gold Coast have more new apartments on the way which may go some way to easing the pressure for this stock.
But demand for apartments above $10 million was even more intense—sales have increased eight times the 10-year average during the first six months of 2021 in Australia.
This contrasts with the middle of 2020 when the global super-prime market took a -61 per cent hit.
Knight Frank head of residential research Michelle Ciesielski said although people were prepared to spend what it took to meet their requirements, it was difficult to find stock.
“The widening gap between this buyer demand and appropriate property supply remains concerning, and residential construction difficulties continue to delay delivery of new product,” Ciesielski said.
“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.”
Buyers in this demographic were increasingly looking for three bedrooms, with developers increasing the share of this configuration from 21 per cent in 2018 to 32 per cent in 2021.
“During the coming years, we will see an increasing number of rightsizers who are seeking a low- maintenance home as their main residence, given the transient global lifestyle that will return for many of the ultra-wealthy population,” Ciesielski said.
“This pent-up demand will continue while new luxury apartment delivery and sales listings remain shallow across almost every prime region of Australia.”
The number of car parking spaces was also contributing to the final sale result with apartments selling for 39 per cent more on average, at $39,800/sq m, with spaces compared to $30,200/sq m without in Sydney, while the difference in Melbourne was 9.2 per cent.