Sydney luxury property market defies RBA rate hikes with billion-dollar sales surge

Sydney’s high-end real estate market has recorded a significant surge despite three consecutive cash rate hikes by the Reserve Bank of Australia in 2024, with luxury property sales totalling more than $1.5 billion.

The city recorded 100 super-prime residential sales valued at over US$10 million in 2024, totalling US$1.586 billion, according to Knight Frank’s Global Super-Prime Intelligence report.

The average transaction was US$15.9 million, cementing Sydney’s position among the world’s top luxury property markets.

Elite suburbs like Point Piper and Barangaroo command average prices of around $12 million, with record-breaking sales illustrating the strength of demand despite rising interest rates.

The luxury segment appears to operate with insulation from interest rate fluctuations, driven by buyers less sensitive to monetary policy changes.

CoreLogic’s Home Value Index shows Australian home values nationally hit a new high in April, adding approximately $2,720 to the median price of a home.

While Sydney’s overall property values remain 1.1 per cent below their September 2024 high, the luxury end of the market has sustained demand and premium prices.

Ongoing development projects underscore long-term investment confidence, including Sydney’s newest luxury lifestyle precinct, The Lands by Capella, a 10,000-square-metre development set to open in the first quarter of 2026.

Experts suggest that for many international high-net-worth individuals, Australian property represents strategic portfolio diversification, with Sydney perceived as offering political stability and a transparent legal system.

The lifestyle component, including beaches, cultural attractions and educational institutions, adds appeal as both an investment destination and desirable place to live.

Commercial property sentiment has also improved, with Sydney CBD office tower values showing their first price gain in three years during the March quarter, rising 0.7 per cent.

Heightened activity includes significant interest in land and redevelopment opportunities in affluent areas.

Five homeowners in Rose Bay are collectively seeking more than $40 million from developers by amalgamating their properties, spurred by new housing policies allowing mid-rise apartments near transport hubs.

Paul Ephron of Colliers reported receiving 150 inquiries for the amalgamated site, indicating robust developer appetite.

Ray White Group chief economist Nerida Conisbee noted that knockdown activity is concentrated in affluent suburbs, with Melbourne leading approvals for demolition at 34,490 houses, followed by Sydney at 32,578.

The market dynamics show a bifurcation, with an API Magazine report finding three-quarters of suburbs within five kilometres of central Sydney experienced property price falls in the past year, while outer, more affordable areas saw gains.

The luxury boom carries significant economic implications through increased transactional revenue including stamp duty and stimulating sectors such as high-end construction, interior design and luxury retail.

However, the surge also raises affordability concerns, with CoreLogic data showing the national median dwelling value reached $825,349 in April.

The market division is evident in geographic patterns, with 81 per cent of suburbs 20 kilometres or more from Sydney’s CBD recording annual gains, compared with only 26 per cent of those within five kilometres.