The rich end of town

It is not that long since some economists and commentators were predicting house price Armageddon, where prices in Australia’s overheated property market could plunge by as much as 40%.

But it appears that the doomsayers got it very wrong. Last week data from RP Data showed Australia’s house prices are rising once again, up 3.3% in the June quarter, and dropped by just 0.1% in 2008-09, despite the global recession and credit crunch.

There are even signs that the prestige property sector is in recovery mode. While the affordable end of the market has been well supported by the Government’s enlarged First Home Owners Grant, property analyst Matthew Bell from Australian Property Monitors says prestige prices were hammered in the early stages of the downturn. But the tide appears to be turning.

“High-end property is strong. In the latest price results, if you look at the top suburbs, they are actually outperforming the first home owner’s market. This is because the high-end property market has…had 30% or 40% falls in prices. So finally people are starting to see bargains there, and demand is putting pressure on prices.”

However, it appears the prestige property price rises came too late to prevent Wolseley Road in the upmarket harbour-front suburb of Point Piper from falling from ninth to 10^th position on the Wealth Bulletin’s list of the world’s most expensive streets.

Actually, it’s not all bad news for Australia’s most exclusive strip, home to wealthy entrepreneurs including Frank Lowy, recruitment industry veteran Andrew Banks, Aussie Home Loans’ John Symond, and car dealer Neville Crichton. Just as Australia has escaped the worst of the downturn, so has Wolseley Road – according to Wealth Bulletin, the average price of a square metre of land was steady at $US28,000 over the last 12 months.

The report says that apart from the sale in March 2008 of famous mansion Craig-y-Mor (Rene Rivkin’s old pile) for $32.4 million (it was bought by a Chinese businessman, Jiang Mei) there have been few sales of note on the street.

The performance of Sydney’s top street is in sharp contrast to the results in some of the world’s ritziest addresses. The 10 most expensive prime residential property on the top 10 most expensive streets in the world saw their overall value fall by 12%.

At the top of the list is Avenue Princesse Grace, Monaco, which retained top spot despite the average price per sq/m plunged from $US190,000 to $US120,000 per sq/m. As an example of the state of the market, Wealth Bulletin highlighted a 332 sq/m penthouse in the street which is on the market for $US50 million, but appears likely to go for just $40 million.

Retaining third spot on the list is Fifth Avenue in New York, where prices have dropped from $US80,000 to $US72,000 per sq/m – not a bad result, given the carnage in the broader US market. As in Wolseley Road, it appears residents are hanging onto their homes because of the fear of big discounts.

Kensington Palace Gardens in London, remains the fourth-most expensive street in the world, although prices have dropped from $US77,000 to $US65,000 per sq/m.

The big mover was Via Suvretta in the Swiss city of St Moritz, which jumped from seventh to sixth in this year’s list after prices actually jumped 18% to $US45,000 per sq/m. According to Wealth Bulletin, a big reason for the rise is the fact that wealthy entrepreneurs are looking to relocate from countries like Britain where the government has increased tax rates for high income earners.

At seventh position is Via Romazzino in Porto Cervo, Sardinia, which makes the list for the first time. A property on the strip in the popular holiday resort will set you back $US42,000 per sq/m, although you’ll need to move quickly if you want to get a spot – apparently Russian oligarch Alisher Usmanov, who also owns the Arsenal Football Club, has bought eight houses on or near the street.

The biggest loser on the list is Severn Road in Hong Kong. It has crashed from second on last year’s list to eight on this year’s, after property prices fell from $US121,000 to $40,000 per sq/m.

Ostozhenka Street in Moscow falls to ninth position, down from sixth place last year. But despite the global recession hitting wealthy entrepreneurs hard, average prices have only fallen from $US40,000 a sq/m to $US35,000.

It’s also worth noting that a couple of streets have fallen of this year’s list completely: Carolwood Drive in Los Angeles (where prices were valued last year at $US30,000 per sq/m) and Altamount Road in Mumbai ($US25,000 per sq/m last year).