Knight Frank’s Wealth Report 2025 found that the amount of prime real estate US$1 million (A$1.6 million) can buy in Sydney has shrunk by a third over the past decade, highlighting the city’s growing unaffordability in the luxury sector.
Despite this reduction in affordability, Sydney continues to attract international buyers due to strong demand, limited available stock, and a resilient economy.
For luxury property buyers seeking more value for their investment dollar, the Gold Coast offers Australia’s most affordable luxury property market, with US$1 million securing 119 square metres of prestige real estate.
Brisbane and Perth follow closely behind, providing better value compared to Sydney and Melbourne.
“Demand for high-end real estate in Australia is shifting,” the report said.
“While Sydney remains the flagship market, lifestyle-driven locations such as the Gold Coast are capturing more interest from affluent buyers seeking a mix of luxury and relative affordability.”
Looking ahead, Sydney’s luxury property prices are projected to grow by 1 per cent in 2025, reflecting a moderating trend amid geopolitical uncertainty and an upcoming federal election.
However, several factors are expected to maintain demand at the top end of the market.
The city’s stock market resilience, a high proportion of cash buyers, and ongoing supply constraints continue to make Sydney’s prime market attractive to wealthy investors despite economic challenges.
“With more high-net-worth individuals actively looking to downsize into premium apartments and tightly held trophy homes, Sydney’s prime market remains attractive,” according to the report.
Sydney’s position in the luxury property market is part of a broader global trend.
The report shows that luxury real estate remains a preferred asset class for wealthy investors worldwide despite economic volatility.
Among international markets, Miami and Dubai lead global price growth, with luxury property values nearly doubling since 2020.
Meanwhile, prime residential values in established markets like London, New York, and Paris have stabilised.
Sydney ranked 67th in the Prime International Residential Index (PIRI 100), with an annual price growth of 1.1 per cent in 2024.
Global cross-border investment into Sydney real estate reached US$8.6 billion last year, reinforcing the city’s appeal among foreign buyers who continue to see value in its prime locations despite the high entry costs.
“The appetite for prime real estate remains strong,” the report said.
“Despite rising debt costs, cash buyers and private capital continue to drive activity, particularly in established luxury hubs.”
