- In Australia, the concept of ‘rightsizing’ — the lifestyle trend of downsizing to luxury apartment living — continues to develop in apartments in the top end of the market
- Prices for new prime apartments and established prime apartments in high-rise projects have risen in the past six years, rising 36 per cent and 31 per cent, respectively
- In contrast to demand, the pipeline of new apartments in Australia’s best areas will shrink by 39 per cent over the next three years, Knight Frank says
- Furthermore, the pandemic has exacerbated supply difficulties for both materials and trained labour required to allow residential growth throughout the country
‘Rightsizing’ — the trend of downsizing to luxury apartment living – continues among properties in the top five per cent of the Australian market.
Although some buyers felt the need to delay their decision-making during the past 18 months, many in the premium residential market are actively pursuing this new way of life but have been impeded by severely limited supplies, a new Knight Frank report has found.
There are three trends driving the recent surge in demand: those looking for a lock-up-and-leave lifestyle; low-maintenance living; and the embracing of co-primary homes, or having two homes in different locations.
Prices for new prime apartments and established-prime apartments in high-rise projects have risen significantly in the past six years, up 36 per cent and 31 per cent, respectively, owing largely to an increase in demand from the rightsizing buyer.
Prime residential sales have a threshold of $3 million in Sydney and Melbourne, and $2 million in Brisbane, Perth and the Gold Coast.
In contrast to demand, the pipeline of new apartments in Australia’s best areas will shrink by 39 per cent over the next three years.
This will be felt most strongly in Brisbane and Sydney, while Perth and the Gold Coast will welcome increased supply.
Since 2014, the amount of land suitable for the development of residential apartment complexes has been progressively reducing. Furthermore, the pandemic has exacerbated supply difficulties for both materials and trained labour required to allow residential growth throughout the country.
Knight Frank Head of Residential Research Michelle Ciesielski said rightsizers had remained active in the Australian property market, with prestige sales data highlighting the continually increasing appetite of buyers for both primary and secondary homes.
“Though these Australians are prepared to spend what it takes to fulfil their rightsizing requirements, the widening gap between this buyer demand and appropriate property supply remains concerning, and residential construction difficulties continue to delay delivery of new product,” she said.
“The shortage of suitable product, particularly at the top end of the market where rightsizers play, has been exacerbated by developers unable to easily secure sites in prime locations adding to the highly pressurised buying environment across Australian cities.”
The upward pressure on the prime residential market has resulted in a spike in super-prime apartment sales, defined as the top one per cent of each market by value – typically $10m+ in Sydney and Melbourne and $7m+ in Brisbane, Perth, and the Gold Coast.