The impact of interest rates being higher for longer has clearly impacted residential mortgage borrowers and this is having an increasing impact on the Australian residential property market. With interest rates on hold again in November, more and more market segments are showing signs of slowing. Transaction activity has slowed significantly at the same time as the spring selling season is bringing extra supply to the market. As more dwellings are newly listed, the slower rate of sales will result in an increase in the total housing stock on the market. This will in turn continue to exert downward pressure on prices which can be observed as a significant slowing in price growth and even, in some markets, a decrease in prices.
Lead indicators like auction clearance rates are softening, marketing periods are increasing and, in some markets, there are increases in vendor discounts (the difference between the initial asking price and the eventual selling price).
As always, the impact can vary significantly between market segments. In markets where there is a relatively limited supply, new listings may not exceed the underlying demand and the stock on the market won’t have the opportunity to build up, so prices will be less affected.
So, what is happening in the prestige residential market?
Location is still a key factor. In Sydney, prestige residential property experienced strong market conditions throughout 2023, but the market has generally been more subdued in 2024, with the number of transactions lower across many prestige locations. The prestige residential market isn’t completely insulated from the effect of prolonged high interest rates and a slowing economy. Prestige property buyers have become less active, and sellers have become hesitant about listing in a slowing market.
That said, trophy homes continue to regularly make the news and there have been some notable sales of prestige property. The Australian house price sale record was reportedly equaled in October 2024, with the $130 million sale of the Point Piper harbour front mansion known as Elaine. Built in the 1860s and previously owned by the Fairfax family, Elaine was last sold in 2017 for $71 million.
Brisbane’s prestige residential market continues to exhibit strong activity and price growth driven by a lack of supply in sought-after locations. There is evidence of more off market transaction activity as buyers seek to entice owners to sell in locations where there is no stock on the market. High prices are also being achieved for recently completed or renovated prestige properties as buyers recognise (and pay to avoid) the cost and delay uncertainty involved in undertaking their own constructions projects.
Mimosa in Hawthorne is reported to have sold in October for $20.25 million and is one of the 86 sales recorded in 2024 in excess of $5 million (31 of which are currently under contract). As always, macro trends influence the residential property market across the whole of Australia, but the impact varies significantly by market segment (by location, property type, and price point).
This edition of the Herron Todd White Month in Review has all the bases covered by our dedicated team of local experts and includes reports on sales of some remarkable prestige properties from around the country.
Kevin Brogan
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