The upper end of the property market is currently performing best, with very slight growth of 0.1% nationally in February and very slight price declines in lower and middle market home values.

The big differentiator with the upper-end market is that buyers are generally not reliant on borrowings, and therefore, rising interest rates do not influence their decisions as much.  

This means they’re more able to take advantage of the macroeconomics impacting the market today to grow their wealth. 

This is one reason why we’re seeing very good demand from prestige buyers right now. The market is at or approaching its bottom and 2023 is definitely the time for buyers to make their next move.

Another reason for strong demand at the upper end is the return of expats and foreign investors. 

The aftermath of COVID and current political and economic challenges in the northern hemisphere are prompting expats to return home. 

They typically come back cashed up after years of working high-paying jobs in low-taxing countries. 

This is why we see so many of them in the prestige market upon their return. They view real estate as the best investment vehicle in which to park the bulk of their personal wealth. 

The lower Aussie dollar is also benefitting these buyers, effectively giving them an additional discount on properties that are selling for 10% to 15% less than they were at the market peak. 

Other foreign buyers are also interested in the Australian residential market for either a second residence or an investment. Research shows Australia is among the most desirable locations in the world to own a second residence. 

All of this demand is occurring against a background of a low supply of premium homes for sale. Current listings levels are historically low, leading to solid sale prices across the upper-end market. 

I think premium property will continue to attract overweight demand. It’s common to see prestige property fall the most during a downturn and then lead the market during the recovery. 

Across the combined capital cities, CoreLogic data puts the upper quartile price decline at 13.5% for the past 12 months.  

Prices for the best of the best may escalate earlier than the main market, and CoreLogic’s February data seems to provide early evidence of this. 

Elevated demand for prestige property is a trend being seen all over the world. 

A new global survey of high-net-worth individuals (HNWIs) by Knight Frank found a third intend to increase their residential property holdings in 2023, and 28% want to increase their commercial holdings.  

The survey found that the average number of homes owned by ultra-HNWIs increased in 2022 from 2.9 to 3.7. Australia is among the top five international markets attracting UHNWIs’ interest. 

Foreign buyers like our country for its lifestyle benefits, currency diversification, stable government, and safety. 

Our education system is also a key attraction for overseas property investors, who see a dual benefit to investing here while their children receive a world-class education. 

It’s also very interesting to note that global HNWIs currently view residential property as the safest asset class in the current economic environment – rather than gold. 

This is significant given gold is such a traditional ‘safe haven’ during times of economic uncertainty.  

The drivers of continuing demand in the prestige market are strong and will only increase from here. 

The views expressed in this article are an opinion only and readers should rely on their independent advice in relation to such matters. 

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