Sydney's prestige residential sector is running so hot it's outpacing the average growth of other luxury markets around the world.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The growth in Australasian markets has surged 10.2 per cent, the Knight Frank Prime Global Cities Index shows.
The index tracks the growth in prices in the top 5 per cent of the market.
Sydney, with a 13 per cent increase, was the third-fastest growing market, behind Vancouver with 15 per cent and Miami, which grew 14 per cent.
Melbourne moved into seventh place in the index after a 7.9 per cent increase in values at the market's top end over the year to June 2015.
Cities in the Asia-Pacific region account for seven of the top 10 places, reflecting the huge amount of capital circulating in the area.
The average pace of growth halved to 2.5 per cent from 5.2 per cent among 35 cities, pulled down by slow growth in Europe, the Middle East and Russia.
Knight Frank's Australia director of residential research, Michelle Ciesielski, said the cooling of growth in Hong Kong and Singapore made other cities more attractive.
"We've seen that in Sydney. Foreigners, particularly Chinese, are looking to secure trophy assets with harbour views. In Melbourne, education and the universities are the drawcards," Ms Ciesielski said.
Morrell & Koren director David Morrell, who acts for buyers at the top end, said: "The elephant in the room is China. They don't care what they pay."
Recent standout deals in Sydney included the "Toaster" penthouse at Bennelong, which sold for $22 million at the weekend, and a Vaucluse waterfront property, Loch Maree, which fetched $24 million. However, that deal fell well short of the $30 million price tag when the property was listed three years ago.
Ms Ciesielski said post-global financial crisis growth in Melbourne and Sydney had lagged behind other cities and there was plenty of room for more growth.
"We're playing catch-up," she said.
Since 2008, Jakarta's top prices grew a staggering 174.5 per cent and 76.9 per cent in Beijing. By contrast, Sydney recorded only 27.6 per cent and Melbourne 23.5 per cent.
"The falling Australian dollar has also made us more attractive, not just to offshore buyers but to expat Australians who are working overseas. They may not be ready to come home but the market is going up and they are trying to get some money into property for when they return."
