Melbourne has officially (but not really) taken over as Australia’s most populous city. But looking at the southern town’s prestige property market, it may not be too long before it’s commanding the emerald city’s glittering prices.
Melbourne’s prestige property market is performing exceptionally well because of high demand and low stock, although the luxury apartment sector is still experiencing a slowdown that began with the Covid-19 pandemic.
There have been very few transactions involving high-end apartments in recent months, which is in stark contrast to the market in Sydney, says Marcus Chiminello, Director at Marshall White. He believes it is an ongoing effect of Melbourne’s Covid-19 lockdowns, which were the world’s longest – the lockdown period lasted nearly nine months before it came to an end in November 2021.
Much of the capital that would have ordinarily gone into Melbourne’s luxury apartment market was dispersed into other types of properties and locations.
“During the Covid-19 lockdowns, many downsizers refrained from moving to an apartment purely because they didn’t want to be stuck inside it,” says Chimenello. “Others downsized into apartments in Sydney, the Gold Coast or Noosa instead, or moved to the Victorian peninsula.”
“Some people are beginning to return to apartments, but we’ve experienced probably the worst two or three years I’ve seen in two decades,” says Chimenello.
Broken records
Meanwhile, records are being smashed in freestanding homes. Last year, Chimenello broke Victorian property records twice in one week.
The first property on 17 St George’s Road in Toorak sold for $74.5 million in August. The buyer was Message Media’s Grant Rule. The price paid was well more than the previous record of $52 million for a sale made five years earlier.
A new record was set just a week later when 29-30 St George’s Road sold for $80 million to 26-year-old Ed Craven, founder of online cryptocurrency casino Stake.com. It is the highest price ever paid for a home in Victoria.
“When we sold 29 St George’s Road, everyone said, ‘The market has changed forever now.’ These prices do shift the market landscape almost instantaneously,” says Chimenello.
The highest price paid for a property in Australia was the $130 million sale of Sydney trophy home Uig Lodge, in Point Piper, to billionaire Scott Farquhar.
Chimenello attributes the high prices to a scarcity of inventory.
“The opportunities to purchase in the prestige market are fewer than we’ve seen for the past three or four years. Given there’s been a lot of wealth creation in sectors such as technology, there is a lot of pent-up demand.”
Forbes Global Property director, Robert Fletcher, agrees that the continual restriction of stock contributes to high sale prices, along with the return of international buyers from China and Singapore after Covid-19 travel restrictions there were eased.
“There’s no question that there has been a big uplift since the Chinese New Year Celebrations in February, just in terms of the number of organic inquiries that are coming from people with $20, $30, $40 or even $80 million to spend,” says Fletcher.
“We’ve had multiple people bidding on the last three or four properties, which shows strength on the buyer side.”
Fletcher and Forbes Global Property director Michael Gibson recently closed a sale for Ricky Ponting and his wife Rianna, who purchased a new home at 26A Linlithgow Road in Toorak.
“The Linlithgow Road had five buyers competing for it,” says Fletcher. “To have that many people seeking to buy a property in excess of $20 million indicates a deep capacity.”
In May, the Pontings put their previous home on Brighton’s Golden Mile on the market with Fletcher and Gibson. The seven-bedroom house, Shandford, has a guide of between $14.8 million and $16 million.
Australia’s biggest city
Melbourne was declared Australia’s largest city by population after the Australian Bureau of Statistics redrew its borders in April. With the inclusion of the district of Melton, its population is now 5.8 million, which is 19,000 more than Sydney.
However, Chimenello says that Sydney has a larger volume of prestige properties with a wider geographic spread.
“The suburb of Toorak is the centre of wealth in Melbourne – it has among Australia’s highest concentration of billionaires. Outside of Toorak, opportunities to buy properties over $20 million are rare. You may find some in parts of South Yarra or Brighton, but that is about it.”
One exception was a Hamptons-style turnkey property in Red Hill that Chimenello recently sold for $26 million. The pandemic prompted an exodus of wealthy people out of metropolitan Melbourne and into the Mornington Peninsula.
Both property experts expect prices to remain high in Melbourne over the longer term, as the inventory of prestige homes will remain below demand levels.
“You would think that if you had $20, $30, $40 or $50 million to spend on a property that there’d be a plethora of options, but there are not,” says Chimenello. “That’s where this frustration is being built up among buyers because these kinds of homes are not readily available.”
