Did you know that the size of the global real estate market soared from $9.6 trillion in 2019 to a staggering $10.5 trillion in 2020?
According to a recent article by the Washington Post, 2021 is going to be a robust sellers’ market with home prices hitting new highs and buyer competition staying strong.
Sydney made headlines this year as it stood out as the city with the largest sales in prime properties worldwide. Last April, the National Australian Bank expected Sydney home prices to rise by 21.6 per cent this year and 3.1 per cent next year. Melbourne also contributed to this trend as its home values climbed 5.3 per cent higher than its pre-COVID peak record back in 2020.
With all these external figures, is it safe to say that Sydney and Melbourne will become the next New York?
Let’s take a look at the top 4 factors that support this claim
1. Sky High Real Estate Prices
Sydney is today’s most expensive city in Australia with a record median house price of $1.41 million and a median rental price of $750 per week. These figures are higher than that of New South Wales whose median house price is $790,000 and the median rental price is $510.
Crazy rich Australians also led Sydney to gain the top spot worldwide for prime property sales. With the ultra-wealthy class now expected to grow by 3.8% annually for the next five years, Sydney is expected to remain on the throne until 2021, sharing the prestigious spot with London.
Meanwhile, Melbourne’s median home value is now at $930,000 after increasing 11.4 per cent over the first half of the year. By Christmas, it is expected to rise by 7.5 per cent, inflating the city’s median house value to $1.5 million. Westpac is also expecting Melbourne dwelling values to rise 10 per cent by the end of 2021 and throughout 2022, with the market moving into a sustained boom.
In New York, there are multiple offers made on almost every well-priced home with offers ranging from $500,000 to an overwhelming $5 million in Manhattan and Brooklyn. Many new listed properties don’t even last a week. In fact, Forbes considered the New York Real Estate in Q2 of 2021 as “one of the hottest springs on record”.
2. People Living in Urban Centres
New York is considered the most densely populated city in the US for many years, with a 20.4 million population as of 2021. Back in 2018, it also gained the top spot for the US city with the highest GDP of an incredible $1.77 trillion. This scenario mirrors Sydney and Melbourne with the recent report by the Australian Bureau of Statistics indicating that they are the biggest cities in Australia with the most population in urban areas.
3. Knowledge Economy
New York has a robust and diverse knowledge economy that spans an incredible variety of industries including design, finance, real estate, life sciences, media, and technology. This has made the city, which consists of five boroughs, become a magnet for talented professionals with its endless work opportunities.
- In design, more than 50,000 practising designers are represented throughout the five boroughs with more than 7,500 design firms and 10 architecture and design schools. The number of designers in New York is more than any other US city.
- New York has nearly 400,000 financial-service professionals with six stock, commodities, and futures exchanges, including the New York Stock Exchange and the National Association of Securities Dealers Automated Quotations (NASDAQ).
- New York accounts for 20 per cent of the US’s advertising workforce.
- New York is home to the world’s most dynamic tech industries that are now supporting 360,000 jobs.
- With Sydney and Melbourne’s large economic base including a huge network of globally competitive industries, well-developed infrastructures, good governance, and outstanding amenities and living environment, their knowledge economies have also grown through the years.
A knowledge city has several characteristics from key knowledge-producing infrastructure to the quality of life that enhances the city’s social and cultural milieu and to further understand the impacts of these elements, a group of research professionals from the University of Canberra have built a new Knowledge City Index for Australia. This allowed the team to compare the strengths and weaknesses of 25 Australian cities. Their findings revealed that Sydney and Melbourne are the top two cities in the country to qualify as knowledge cities with both cities gaining the highest rates on the KCI measures including knowledge capacity, mobility, and industries, digital access, income, and smart work.
4. Sophisticated Home Designs
Whilst New York is known for its stunning skyscrapers, parks and houses, Sydney and Melbourne are also booming with luxury living spaces that evoke sophistication and class.
According to Michelle Ciesielski, partner, and head of residential research at Knight Frank Australia, “Every quarter since March 2013, Sydney’s prime residential market has recorded positive annual price growth, demonstrating the ongoing undersupply of luxury prestige homes being built whilst our ultra-wealthy population continues to rise.”
Meanwhile, Knight Frank Australia revealed that Melbourne’s ultra-wealthy locals are snapping up prestige properties faster than they were at the end of 2020. A huge number of 179 opulent properties worth between $3m and $10m were sold in the first three months of 2021, denoting an 8 per cent rise compared to the final quarter of 2020.