Australia’s luxury real estate market is outperforming its international peers. Here’s why

“Internationally, we are seeing strong interest in Sydney’s premium properties from European, Asian and returning expatriates,” Mr Prax said. “They all want properties with views or large tracts of land and see Sydney as a safe haven, while locals are looking to upgrade.

“Demand for high-end properties in Sydney is also very strong because high-end homes are tax-free assets and many wealthy people are waiting for their chance to get something special. So when they do, they are warmly welcomed. And this prestige market tends to be less affected by interest rates.”

Marshall White Group sales director John Bongiorno said Melbourne’s luxury housing market was underperforming, with prices falling slightly by 0.2 per cent in the June quarter, but overall the high-end market remained buoyant.

“The luxury market in Melbourne is price sensitive at the moment,” he said. “Anything really good is in demand, but if a property doesn’t tick all the boxes then the price will drop.”

“I don’t think the market is great, but it’s not bad either, it’s just slightly skewed towards buyers. But it’s been helped by population growth and interest from overseas buyers, particularly from Asia, especially China. It’s our strongest market and Melbourne has a larger Asian population than either Sydney or Brisbane, which helps.”

National Australia Bank chief economist Alan Oster said Melbourne’s land tax issues and rental regulation changes were weighing on market growth, while Perth house prices were still rising rapidly, driven by interstate migration, and Sydney and Brisbane house prices were growing but at a slower pace.

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“At the high end of the market, we’re seeing people in Hong Kong saying, ‘F**K you! Let’s go back to Australia!'” Mr Oster said.

“But we have to wait and see how interest rates move to see if there will be a significant change in the market. We pushed back our rate cut forecast from November to May this year, which in hindsight was probably too far away,” he said.

“But it depends on how the data moves, especially unemployment and inflation. In the luxury market, I have a house in Portsea but when you go out there, half the houses are for sale.”