Which Australian city dominates the global waterfront property market?

Despite the year-on-year decline in the price premium paid by those who want to live or own a piece of the city’s harbour line, this marks the second year the NSW capital has commanded the highest price premium out of the eight global cities analysed in the report.

For comparison, Sydney’s premium is more than double Auckland, which is in second place at 58 per cent.

Monaco, where the waterfront premium stands at 42 per cent, France’s Cap d’Antibes at 40 per cent and Paris at 38 per cent rounded out the top five cities with the biggest waterfront price bumps.

While the median surcharge for waterfront prices across global markets stands at 45 per cent, research found beachfront homes have the biggest uplift overall, and have extended their lead since last year.

On average, beachside homes enjoy a 76 per cent premium, up from 63 per cent in 2022. Harbour homes are next, commanding a 61 per cent premium, followed by riverside (39 per cent), coastal (36 per cent) and lake (35 per cent).

Knight Frank head of residential research Michelle Ciesielski said the significant increase in waterfront premiums is attributable to demand strongly outstripping supply.

“Frontline water access is a rarity in cities and protected areas of outstanding natural beauty,” she said.

Ms Ciesielski noted supply and demand dynamics in Sydney are extremely tight, with a significant shortage of prestigious homes listed for sale in prime regions, including waterfront properties.

Further proof of the strong demand, according to the expert, are the majority of these properties being sold off-market, often before any marketing efforts are made.

“There are only a handful of new projects in Sydney under construction which enjoy a water view of the Sydney Harbour Bridge and Opera House, but even less with an absolute waterfront,” she added.

Looking forward, Ms Ciesielski expects conditions in the waterfront market not to drastically change anytime soon.

“Tight building restrictions will limit the availability of waterfront stock, whilst on the demand side, investors vie for such homes alongside second home purchasers, given their rentability as holiday lets and above-average occupancy levels.

“Driven by their experiences of being priced out of the high-end housing markets in major global cities like London, New York and Hong Kong, many expats purchasing property in Sydney are opting to delay their purchase specifically for waterfront properties,” according to the expert.

She noted the allure of waterfront living, including access to private maritime facilities, is a major factor attracting expats.

Ms Ciesielski said the rarity of waterfront home transactions contributes to the resilience of property prices for both standalone houses and apartments.

“The desirability of waterfront homes and the potential they offer as an inflation hedge alongside capital preservation is likely to see demand swell further given the current economic backdrop,” she concluded.