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Melbourne Prime Residential Review Summary (Q3 2021)

Core Content

The Melbourne Prime Residential Review Q3 2021 provides an overview of the performance and trends in Melbourne's luxury real estate market. It highlights key metrics such as price growth, sales volume, rental yields, and the development pipeline for prime properties, which are defined as the top 5% of each market by value.

Main Trends

Wealth Trends

• Australian Ultra-High-Net-Worth Individuals (UHNWIs): The UHNW population grew by 10.9% in 2020 to 3,124 individuals with net wealth of US$30 million or more.
• Melbourne's Share: Melbourne had the second-highest share of UHNWIs at 20%, with 629 individuals.
• Market Outlook: The UHNW population is expected to grow annually by 3.8% over the next five years.

Sales Performance

• Sales Volume: In Q2 2021, 222 prime properties (valued between $3m and $10m) were sold, representing a 24% increase from Q1 2021 and a 59% increase compared to the same period the previous year.
• Super-Prime Sales: Sales of super-prime properties (valued at $10m+) increased by 42% in Q1 2021, with 17 sales recorded, and a total growth of 375% over the past year.
• Days on Market: The average days on market for a prime property in Q2 2021 was 89 days, a decrease from 97 days in the previous quarter.

Price Performance

• Annual Capital Growth: Prime property prices in Melbourne rose by 3.6% over the year ending June 2021, with a 2.2% increase in the last quarter.
• Knight Frank Forecast: Melbourne prime prices are projected to grow by 5% by the end of 2021 and further by 3% in 2022.
• Currency Advantage: Buyers using Pound Sterling had the most advantage in purchasing Melbourne prime property, with an additional 3% benefit.
• Value Comparison: For US$1 million, buyers could acquire 87 sqm of internal luxury floorspace in Melbourne, compared to 46 sqm in Sydney and 22 sqm in Hong Kong SAR.

Rental Performance

• Gross Rental Yield: The gross rental yield for Melbourne prime property dropped by 8 basis points to 2.72% in Q2 2021, from 2.92% a year earlier.
• Rental Growth: Rental growth for prime properties in Melbourne fell by 0.4% in Q2 2021 and by 1.0% over the past year.

Key Development Insights

• New Developments: In 2020, 13,875 medium- and high-density new apartments and townhouses were completed in Melbourne's prime regions, a 63% increase from 2019 and above the 3-year average of 9,625.
• 2021 Forecast: There is a 46% decrease in new medium- and high-density completions forecasted for 2021, with 7,450 units currently under construction.
• Regional Distribution:
  • Inner Melbourne: 4,675 units
  • Eastern Suburbs: 1,100 units
  • Bayside: 1,000 units
  • Inner East: 675 units
• Bedroom Distribution:
  • 2-bed apartments: 36%
  • Studio & 1-bed: 32%
  • 3-bed+: 33%

Additional Information

• Price Range: Melbourne's new prime apartment prices remained steady in 2020, averaging between $19,000/sqm and $29,500/sqm.
• Data Sources: All data is sourced from Knight Frank Research.
• Contact Details:
  • Research: Michelle Ciesielski, +612 9036 6659, michelle.ciesielski@au.knightfrank.com
  • Residential: Shayne Harris, +61 2 9036 6713, shayne.harris@au.knightfrank.com
  • Valuations: Alistair Carpenter, +612 9036 6662, al.carpenter@au.knightfrank.com
  • Franchise Partnerships: Scott Timbrell, +612 9761 1823, scott.timbrell@au.knightfrank.com
  • Private Office: Sarah Harding, +612 9036 7552, sarah.harding@au.knightfrank.com
  • Media Enquiries: Caroline Stanley, +614 021 70901, pr@au.knightfrank.com

Recent Publications

• Sydney Prime Residential Review Q3 2021
• Brisbane Prime Residential Review Q3 2021
• Perth Prime Residential Review Q3 2021
• Gold Coast Prime Residential Review Q3 2021
• Australian Residential Tennis Court Premium 2021
• Australian Prime Waterfront Index 2021

Disclaimer

This report is for general information only and should not be relied upon for any decision-making. Knight Frank Australia Pty Ltd does not accept any responsibility or liability for any loss or damage arising from its use. Reproduction of this report is not allowed without prior written approval.