Melbourne’s luxury property market is writing a compelling narrative as it forges ahead into 2024. Across Kay & Burton’s core markets, there has been a surge in activity, buoyed by strong clearance rates, increased stock, and robust demand.
The market continues to witness a dynamic interplay between supply and demand. Despite listing figures across Australia up on the previous year, the market is still defined by an undersupply of housing options. Melbourne’s listings increased by 28.2 per cent in Q1 2024, according to Domain year-on-year figures.
Nationally, home values have continued their ascent for the 14th consecutive month, with a 0.6 per cent rise in March, as per the latest CoreLogic data. And the growing anticipation of a potential interest rate cut in 2024 or early 2025 adds further impetus to a market already defying higher borrowing costs.
The resilience of Melbourne’s luxury segment to interest rate fluctuations, coupled with burgeoning interest from international buyers, has notably fuelled demand, particularly across Metro Melbourne. Meanwhile, the Mornington Peninsula shows signs of recovery, with renewed buyer interest following initial hesitancy due to higher land tax obligations. Buyers now encounter more options, providing choices reminiscent of pre-COVID times.
Results from the first quarter of 2024 led to Kay & Burton securing a commanding 41 per cent market share for sales above $7 million across Bayside, Boroondara and Stonnington*. This was followed by our next nearest competitors at 34 per cent and 10 per cent*. Sales volumes were seasonally high, particularly in March, which was the highest gross sales month for Kay & Burton since its establishment in 1938.
“The first quarter of 2024 has been extraordinary; it’s evident there is renewed confidence back in the marketplace,” Kay & Burton Executive Director Scott Patterson said. “People have been sitting idle, concerned about interest rates but since they have stabilised, both buyers and sellers are back in the market and are being a lot more decisive. We have seen some incredible homes come to market which were held back last year due to the uncertain economic climate.”
Mr Patterson said the initial hesitancies surrounding changes to land taxes had eased, with the principal place of residence becoming the primary focus for many.
“Now, all roads lead back to investing in your principal place of residence. We are witnessing a notable shift in portfolios, with a greater emphasis on the family home. And although families continue to face pressures from mortgages and school fees, we are observing increased movement and accessibility to funds.”
Kay & Burton Executive Director Gowan Stubbings said the outlook for the market remained positive amid a growing expectation that interest rates will start to fall later this year or early next, providing a boost to borrowing capacity and sentiment.
“People aren’t holding back anymore,” he said. “There’s a renewed vigour, with strong enquiry across the majority of price sectors.”
“We are still witnessing unprecedented interest from international buyers, with strong interest from China, the US, Europe and the UK. These purchasers are drawn to the lifestyle offerings in Australia and possess available capital, making our top-end market a highly attractive investment.”
Alex Schiavo
Executive Director
Group Board Member
Bayside
The Bayside market, especially in areas like Brighton’s Golden Mile, has exhibited remarkable resilience, particularly at the top end. The vigour of the $5 million-plus segment is bolstered by both global and local interest, with international demand underpinning its strength. While turnkey properties continue to garner the highest demand, there’s been a noticeable shift as concerns about building and renovations ease, prompting renewed interest in land and renovation opportunities. Although listings have increased, they have yet to meet the growing demand, but we’re observing a gradual move towards a more balanced market for buyers and sellers. We are also witnessing trophy homes come to market at price points Bayside has never experienced before, indicative of evolving market dynamics.
Sam Wilkinson
Licensed Estate Agent
Boroondara
The Boroondara market has seen significant activity, notably in the $7 million-plus segment where Kay & Burton secured eight transactions in the first quarter—almost 50 per cent* of all prestige sales. Notable sales include record-breaking deals in Mary Street, Hawthorn, and Harcourt Street, Hawthorn East, ranging from $18-20 million. The preference to invest more in primary residences as tax havens is driving up demand in this sector. Majority of prestige listings sold under competition in the March quarter, leaving a large cohort of prospective buyers still searching. As listing numbers soften in the April-June quarter, prices are expected to rise due to heightened demand and increased competition for limited stock.
Andrew Sahhar
Director
Stonnington
In the first quarter of this year, Stonnington’s market witnessed a resurgence of generational estates changing hands, adding vitality to the landscape. However, demand continues to surpass supply, creating a competitive environment for local and international buyers. Notably, a new demographic of buyers, particularly from the tech and crypto sectors, has injected fresh dynamism into the local market. The rightsizing movement continues to persist, with robust demand for house-sized apartments, reflecting a preference for low-maintenance lifestyles. Kay & Burton secured 56 per cent market share for properties priced over $10 million across Stonnington for the first quarter of 2024*.
Andrew Hines
Director
Flinders/Red Hill
The introduction of land tax for secondary residences and recent interest rate increases prompted both vendors and buyers to pause and assess their circumstances on the Peninsula. However, we’re now witnessing a renewed interest from buyers, particularly as certain properties become more accessible. For those considering the Mornington Peninsula as their primary residence, selling in Melbourne and relocating here not only provides residual funds but also wider choice, with stock levels reminiscent of pre-COVID market conditions. With interest rates holding steady and promising opportunities emerging, we anticipate a surge in buyer interest and enquiries as we move into the second half of 2024.
Liz Jensen
Director
Portsea/ Sorrento
As we navigated through the first quarter of 2024, there was a noticeable uptick in sales activity across the Portsea, Sorrento, Blairgowrie, and St Andrews Beach markets on the southern Peninsula. Most apprehensions stemming from concerns about interest rate hikes, the rising cost of living, and uncertainties surrounding land tax implications have given way to a newfound confidence among buyers. Whether they’re new permanent residents or holiday home investors, there’s a palpable commitment to realising the dream of a coastal lifestyle across a diverse price spectrum. We learned from the COVID-19 pandemic that very little in life is as predictable as it once was. Yet, amidst the uncertainties, the southern Mornington Peninsula market remains steadfast in its resilience and adaptability.
*Data sourced from realestate.com.au sold listings and Kay & Burton’s CRM.