International Buyers Boost Sydney's Real Estate Market

While home values have dropped overall in the Australian city, the top end of the market continues to see high demand and big sales

Despite an overall drop in home values in Sydney, Australia, the luxury real estate market is experiencing high demand and significant sales due to the influence of international buyers and cash deals. While many buyers in the general market are being immobilized by soaring interest rates, cash buyers in the top price points remain active in the absence of sufficient luxury inventory.

In 2022, Sydney experienced the most significant annual price falls among all of Australia's capital cities, with home values declining by 12.1%, according to data from CoreLogic. However, the prime end of the market had a different experience. Home prices across Sydney's top 5% in terms of value actually increased modestly by 1.1% in 2022, according to Knight Frank's 2023 Wealth Report.

Industry insiders attribute the buoyancy of Sydney's high-end properties to the sector's relative immunity to interest rate movements. Erin van Tuil, the head of residential for Knight Frank Australia, notes that the country has a larger proportion of high-end cash buyers than average, with roughly 60% of prime market buyers being cash purchasers.

Low supply of prestige property also contributes to the luxury market's resilience as wealthy homeowners don't want to, or don't need to, sell. According to Monika Tu, founder and principal of luxury property brokerage Black Diamondz, the number of cashed-up foreign buyers and returning expats purchasing property in Australia is rising. She states that around 70% of her deals are cash, and buyers looking for homes valued at A$25 million and up are "very active."

Michael Pallier, the director of Sotheby's Sydney International, states that besides rising interest rates, other factors influencing prestige buyers include the stock market and the value of the Australian dollar. He believes that the current lack of stock availability contributes to the ongoing demand from buyers.

Overall, despite the uncertain global events, prime market buyers are still looking for the right deal and are willing to invest significant sums of money in Sydney's luxury real estate market.