Generating wealth through luxury homes in Melbourne.

Property investment has long been the cornerstone of wealth creation in Australia and a consistently successful strategy for investors. However, many investors are exiting the Melbourne market with rising interest rates, increased government taxes on investors, and a slowdown in property price growth. Despite these challenges, those investing in luxury homes as owner-occupiers or foreign investors continue to enjoy strong returns.

The pandemic-induced supply chain disruptions, rising construction costs, and increased overseas migration have intensified the demand for the already limited supply of well-located designer homes. Additionally, the post-pandemic emphasis on lifestyle factors such as proximity to water and nature, health and well-being features, working from home, and intergenerational living has made luxury properties even more appealing to wealthy Australians.

This scarcity of premium properties is expected to sustain long-term demand, especially for freestanding houses within a 10-kilometre radius of capital cities, particularly those near water and with water views.

Westpac’s recent Prestige Property Market report, conducted in collaboration with CoreLogic, highlights luxury housing as a powerful tool for wealth building. The scarcity of newly built alternatives means that well-located existing properties will likely attract significant buyer interest. The limited availability of land in Australia’s most prestigious locations ensures the resilience of the premium market. Consequently, high-end housing price growth is underpinned as demand consistently exceeds supply.

The ultra-high-end markets characteristics are increasingly diverging from the mainstream, functioning in a somewhat insulated sphere. This separation is largely due to buyers of prestige properties being less affected by interest rate fluctuations. High-worth individuals (HNWIs) and international buyers often have the financial means to secure financing or complete transactions with cash.

The recent surge in migration and the return of wealthy Chinese buyers may also be boosting the market, with these factors expected to drive increased activity for the remainder of 2024. As the luxury segment moves into the second half of 2024 with renewed momentum, it is anticipated to continue outperforming the broader housing market in the medium term.

The luxury home market in Melbourne.

The current slowdown in the Melbourne property market compared to other major cities is evident. Analysis shows that the price gap between Melbourne and Sydney has widened, and Melbourne’s median house price is now comparable to Brisbane’s.

However, the luxury property market in Melbourne tells a different story. For homebuyers with $5 million or more to spend, competition for quality real estate is intense. The market is thriving, with strong auction clearance rates and an increasing number of properties available, driven by robust demand, particularly from new wealth in the technology sector.

Toorak continues to perform exceptionally well, maintaining its status as Melbourne’s key luxury suburb in 2024. Brighton also saw a significant number of properties selling for over $5 million in the first half of this year. Other popular luxury suburbs, including East Melbourne, South Yarra, Armadale, Kew, Hawthorn East, and Portsea in the Mornington Peninsula, have also recorded strong activity so far this year.

How to buy well in the luxury property market.

Navigating the luxury home market requires a deep understanding and appreciation of its unique dynamics. Various factors drive value and influence transactions within this sector and most transactions are conducted off-market, often going unnoticed by the general public. High-end real estate agents operate discreetly, relying heavily on their personal connections with buyers’ agents and high-net-worth individuals.

Several prestigious sales agents, with whom we maintain strong relationships, have reported a rise in inquiries for high-quality, sought-after luxury properties, driven by growing buyer confidence in this sector.

Looking for a luxury home in Melbourne?

Contact us for a free 15-minute discovery call to discuss how we can assist you in navigating Melbourne’s luxury home market. Our real estate agent connections run deep in the luxury market and we can make sure you have access to the whole market.