Rising building costs boost demand for luxury homes,
Demand for houses priced up to $20 million is currently strong in Australia’s luxury residential market.
Recent research indicates that local buyers and those looking to upgrade are the most active participants.
Sean Hughes, director of Haiven Property, noted a surge in demand and record prices for luxury properties in Perth.
He stated, “The Perth prestige residential sector is extremely vibrant, and it will likely remain so for the foreseeable future.”
Hughes explained that this segment of the market is still significantly undervalued at present.
“From Trigg to City Beach, Sorrento, Iluka, and beyond, interest is high from various market segments,” he added.
Local buyers eager to upgrade or downsize are particularly active, along with expats seeking high-end homes.
In these premium suburbs, securing land has become increasingly rare.
Even when land is available, the cost and time required to build new homes act as deterrents.
This situation has led to soaring demand for existing homes in the area.
CBRE’s Prestige Residential Valuer Insights for Q3 2024 surveyed valuers across Australia specializing in high-end properties.
Notably, 40 percent of valuers reported strong to very strong demand for prestige properties in their local markets.
South Australia and Western Australia recorded the highest levels of demand among the states surveyed.
Valuers noted that demand was particularly strong for multimillion-dollar homes valued at up to $20 million.
They also anticipate further price growth in Western Australia over the next 12 months.
Trent Fleskens, managing director of Strategic Property Group, mentioned that Perth’s property market is accelerating.
He stated that prestige home buyers are looking for value below replacement cost in the luxury market.
In fact, rebuilding a similar mansion now costs about 50 percent more than it did a decade ago.
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“The savvy investors always act first,” he stated.
“In the years 2017-2018, Perth’s property market was struggling to gain momentum. Interestingly, the high-end market made key decisions.”
“Moreover, in late 2024, as we anticipate increased competition due to expected lower interest rates, the luxury market is once again leading.”
Highlighting the strong demand in Perth’s luxury sector was the off-market sale of a home in Seaward Loop. This home sold for $6.1 million, marking the highest sale price north of Scarborough in nearly ten years.
Meanwhile, down the coast, former Liverpool goalkeeper Brad Jones and his wife, Dani, have listed their multimillion-dollar residence in Applecross.
This property, located at 47 Duncraig Road, features five bedrooms and five bathrooms. Additionally, it sits on a large block and includes a guest suite, plus a fully equipped second kitchen.
Previously, the home sold for $3.9 million in 2020. Now, the couple is seeking offers starting at $7 million.
Ray White Group’s chief economist, Nerida Conisbee, mentioned that significant increases in construction costs have characterized the economy since the pandemic.
Initially, these increases began as supply chain issues. However, they have since evolved into a record number of construction companies entering receivership.
“Although the situation is beginning to improve, constructing a new home remains considerably more expensive than it was before the pandemic,” she explained.
Furthermore, this disparity between the costs of building a new home and purchasing an existing one has fueled price growth for two years.
