Luxury property bolsters broader market

The Melbourne and Mornington Peninsula property markets have begun to find equilibrium, with the luxury sector maintaining its robust momentum. In the first half of 2024, demand and property prices at the top end of the market soared, driven by both domestic and international buyers competing for premium properties amid a persistent stock shortage.

As inflation eases and interest rates stabilise, consumer confidence is expected to rise in the latter half of 2024. This increase in confidence is likely to trigger the “wealth effect,” where rising wealth fosters financial security and increased spending. As a result, more buyers and sellers are expected to enter the market, providing an optimistic outlook for spring.

According to Kay & Burton Executive Director Alex Schiavo, turnkey properties remain in high demand, but there is also a renewed interest in land and renovation projects as concerns about building costs and supply chain issues continue to ease.

“The top end of the market is incredibly strong, and in other segments, we are noticing more stability,” Mr Schiavo said.

Kay & Burton Executive Director Peter Kudelka noted that the sense of urgency that once defined the market has subsided.

“The fear of missing out (FOMO) has significantly reduced, allowing both buyers and sellers to take more time with their decisions,” he said. “Patience is now a virtue in the property market, as strategic buyers and sellers carefully navigate their options, fostering more balanced market conditions.”

On the Mornington Peninsula, despite new land taxes, a series of strong sales leading into winter has set a positive tone for spring, according to Kay & Burton Executive Director Tom Barr Smith.

“Buyers certainly have a lot of choices on the Mornington Peninsula currently, but properties are still garnering strong results. Vendors just need to be patient to find that perfect buyer,” Mr Barr Smith said. “With continued positive talk about interest rates, we are expecting confidence to continue to rise, meaning spring is shaping up to have the typical seasonal buoyancy.”

The market has shown remarkable resilience, recovering swiftly from the downturn of early 2023, which was one of the sharpest and shortest in property market history. This positive trajectory is bolstered by the strong performance of the prestige market. Melbourne’s inclusion in Knight Frank’s 2024 Wealth Report as one of the world’s top 25 most in-demand markets, with a projected growth of 3% in 2024, underscores solid market fundamentals and the return of foreign investors.