Australia’s luxury real estate sector is stirring back to life, showing the first signs of a market rebound, according to CoreLogic’s latest Housing Chart Pack for March. With high-end properties leading the way in February, this shift could signal a broader recovery in the housing market.
Premium Homes Outpace Lower-Priced Properties
Luxury homes—those in the top 25% of property values—recorded a 0.2% price increase in February, reversing a -0.3% dip in January. While more affordable homes still led growth at 0.4%, the turnaround in premium properties suggests a changing market dynamic.
CoreLogic economist Kaytlin Ezzy pointed out that Sydney, Melbourne, and Hobart saw the biggest rebounds among high-end properties.
“The upper 25% of home values in these cities have historically been the most sensitive to interest rate movements,” Ezzy said. “Seeing improvements in these markets could be a strong indicator of a broader market recovery.”
If this trend continues, property performance of high-end properties could outpace lower and middle-tier homes for the first time since August 2023.
Sydney’s Prestige Suburbs Lead the Comeback
In Sydney, where the broader market remains subdued, luxury suburbs are seeing the strongest turnaround.
The Eastern Suburbs - North region, home to elite neighborhoods like Point Piper, Double Bay, and Rose Bay, recorded a 2.0% price increase in February, rebounding from a -0.5% decline in January.
Hornsby also saw a 1.1% rise, reversing a -1.1% fall the previous month—a dramatic 200-basis-point improvement.
Ezzy attributed this surge to borrowing dynamics: “High-end markets often respond more strongly to cash rate adjustments because buyers in these areas typically rely on more substantial financing.”
However, she cautioned that sustainability remains uncertain, given the Reserve Bank of Australia’s (RBA) cautious outlook.
“The RBA’s board minutes in February were fairly hawkish despite the rate cut, so there’s still uncertainty about whether this momentum will last,” Ezzy added.
Meanwhile, Sydney’s auction clearance rate edged down slightly, dropping to 64.5% in early March from 67.2% in previous weeks.
Melbourne and Hobart Join the Rebound
Similar trends are emerging in Melbourne and Hobart, where luxury markets are leading price gains:
Melbourne’s Stonnington East saw the biggest improvement, shifting from a -1.9% drop in January to a 0.8% gain in February—an impressive 264-basis-point swing.
Other high-end Melbourne markets, including Manningham East, Bayside, and Glen Eira, also posted notable price increases.
Hobart’s North-East region, home to the city’s premium real estate, recorded a 0.4% gain, tying with Melbourne for the strongest capital city growth in February.
Rate Cuts Drive Market Optimism
The recent 25-basis-point cash rate cut, lowering the rate to 4.1%, has played a key role in boosting sentiment.
“This suggests buyer confidence is also a factor,” Ezzy explained. “If people believe they’ll be able to access more financing, that can accelerate market activity.”
Luxury markets, in particular, benefit from lower borrowing costs, as prestige buyers often rely on financing rather than outright cash purchases.
Key Takeaways from CoreLogic’s March Report
Australia’s total residential real estate value held steady at $11.2 trillion in February.
National home values declined -0.1% over the rolling quarter, with capital cities down -0.4% and regional markets rising 1%.
Sales activity slowed, with 40,085 transactions in February, though the annual total of 532,244 still represents a 6.2% year-on-year increase.
Homes are taking longer to sell, with the median time on market climbing to 42 days, up from 27 days in Q3 2024.
Vendor discounting widened slightly, increasing from 3.5% to 3.6%.
Rental growth continues to cool, with annual rent increases dropping to 4.1% in February, compared to 8.3% in March 2024.
What’s Next for the Luxury Market?
While early signs of recovery are encouraging, uncertainty remains. Further rate cuts could fuel continued growth, but lingering caution from the RBA and extended selling times suggest the market isn’t fully back in boom mode just yet.
For now, all eyes are on the high-end sector, which has historically been the first to rally in past market recoveries. If this trend holds, luxury property owners and investors may be looking at a promising year ahead.
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