How the prestige property market works
By Rich Harvey, Founder & CEO propertybuyer
There is more to the prestige property market than glamour and annual ‘top ten’ lists - fun as they are.
While prestige property is out of most people’s reach, Australia's prestige market is an interesting and complex side of the overall real estate and, often it can be more challenging than one might expect to find and secure a dream prestige home.
Here’s a closer look at how the prestige market works, and how it differs from the general market.
What Constitutes Prestige Property?
Prestige property is property at the upper end of the price spectrum. Typically, entry price points are around three to four million dollars.
At the top end of the scale, homes sell for as much AUD$71 million - which was the price paid recently for a house in Point Piper in 2017.
Who Are The Prestige Buyers?
Wealthy local buyers, business owners, expats and some foreign buyers make up the core mix of buyers for the luxury market.
In the last few years we’ve seen a lot of activity from foreign investors, with Australia’s climate, beaches, harbour views, nature parks, growing economy and safe environment being the key drivers behind the interest.
Many of the high-end homes are sold to buyers who keep themselves anonymous, but last year the top 5 homes in Sydney were bought by big names such as high-end motor vehicle importer, Neville Crichton; real estate investor, Andrew Potter; Singaporean tycoon Chio Kiat Ow and founder of Atlassian, Scott Farquh.
The State Of The Prestige Market in 2018:
Prestige buyers are generally less affected by economic downturns and other property trends than the general market. This, of course, is mostly due to the fact that owners are wealthy enough to afford to hold off on selling unless there is a significant offer, and buyers are wealthy enough to make them.
While house price growth across major Australian cities has shown signs of slowing, the prestige market has remained strong thus far. The demand for prestige properties continues to outstrip supply, and the market is still competitive.
How Different Is The Process Of Buying A Prestige Property?
Luxury properties are usually sold by silent auction or silent sale and are not advertised through the usual methods. This makes it very important to have the right connections and contacts within the prestige market, which is why most prestige buyers use an agent.
With so few homes on the market and the stakes being very high, buying a prestige property is usually quite a competitive experience. Almost all the buyers in the prestige price bracket are represented by professionals, as are the sellers, so the negotiations tend to be more intensive.
The hunt for a perfect home can go on for slightly longer as well, because prestige buyers typically know exactly what they want and are, understandably, not prepared to settle for less.
Where Are Most Of Australia’s Luxury Properties Located?
NSW (Sydney in particular) was home to the majority of the most expensive houses sold in 2017. Melbourne came in second.
The lower North Shore and Eastern Suburbs of Sydney are, on the whole, always going to be the top shelf for NSW property – but there are some specific suburbs worth keeping an eye on as well:
Mosman, Cremorne, and Balmoral, Manly, Bayview and Palm Beach are all extremely popular and even a little further afield in spots like Turramurra and Warrawee, you’ll find thriving prestige markets.
The Benefits Of Owning Prestige Property In Sydney:
Aside from the obvious allure of living in an envy-inspiring home, what many people need to understand is that owning a high-end property also gives buyers huge power through equity. That’s the capacity to leverage your existing home’s value to buy into the top tiers of Sydney’s property market.
What’s more, it goes beyond just big financial investment: The lifestyle on offer around Sydney’s North Shore and Eastern Suburbs is unparalleled across the rest of Australia, and even most of planet earth!
Tips For Buying Prestige Property:
Buyers’ agents play a particularly important role in prestige property for a few reasons.
In a competitive market, the process of identifying properties, negotiating a great price and acting quickly is vital. The sellers are typically represented by experienced prestige property professionals, so having someone up the learning curve in the buyer’s corner is vital.
Because prestige properties are often sold off-market, it’s important to have the right connections. A good buyers’ agent will know the market, the areas and even specific properties which are most likely to offer the best solution for a buyer. They’re also likely to know the sellers’ agents and can, therefore, assist in securing a great deal in a limited length of time.
Prestige buyers, by their very definition, have high budgets, but they have a budget nonetheless. Overpaying on a property is costly, both in terms of that property meeting expectations and its profitability when it’s resold.
The prestige property market is more complex and multifaceted than most people realise when looking at these grand homes.
Our agents have been finding prestige homes for our clients for over 17 years, and have seen every side of this fascinating market. It’s an interesting side of Australian property, and one that most people never get to see.