Buying a luxury apartment or house in Point Piper or Toorak has become relatively more affordable for the world's rich, according to the latest global Wealth Report by real estate firm Knight Frank.
Despite house prices continuing to rise in Australia, Sydney slipped from second to 11th and Melbourne from sixth to 12th on the Wealth Report's 2016 ranking of luxury residential property price growth after both cities recording weaker annual growth compared with other luxury residential markets.
While Sydney and Melbourne managed growth of about 9 per cent, prime residential property prices grew by more than 26 per cent over the year in the Chinese mega cities of Shanghai and Beijing, which topped the rankings.
Auckland, Toronto and Vancouver – cities which compete with Sydney and Melbourne for overseas property buyers – all ranked in the top ten.
How many square metres $US1 million buys across the world.
The Wealth Report, which tracks the spending patterns of high-net-worth and ultra-high-net-worth people across 89 countries, also found that buyers get far more property bang for their buck in Sydney and Melbourne.
According to the report, spending $US1 million ($1.3 million) would buy you a 59-square-metre apartment in Sydney and a 110 sq m pad in Melbourne, compared with just 17 sq m of living space in Monaco, 20 sq m in Hong Kong and 26 sq m in New York.
As a consequence of this relative affordability and Australia's reputation for offering a good quality lifestyle, Sydney and Melbourne attracted a net inflow of 7000 HNWIs ranking them first and second globally with Perth ranking 8th.
"Australia is increasingly well-positioned for the world's wealthy as a good place to migrate and invest due to a number of factors, including lifestyle and relative security as HNWIs seek a safe haven from political upheaval," said Knight Frank's head of residential research in Australia, Michelle Ciesielski
"Since the global financial crisis, the world's wealthiest people have shifted their focus from the size of their returns to the safety of their capital.
"Given the lower global economic growth environment, and the heavy reliance on more volatile emerging markets, the personal safety of people in positions of wealth is increasingly being targeted as inequality grows," said Ms Ciesielski.
Ms Ciesielski added that the the weaker Australian dollar made securing property more favourable for expats and wealthy overseas buyers. At the same time she said the stronger penalties being enforced by the Australian government, for those who breach foreign investment rules and the new FIRB fees was encouraging more due diligence on property deals.
According to the Wealth Report, Australasia – Australia, New Zealand and the Pacific islands – had 4220 ultra-HNWIs, those with net assets of $US30 million or more, at the end of 2016, up 11 per cent on 2015.
The report forecasts this number to rise by 70 per cent to 7180 by 2026 with Sydney's ultra-wealthy population is projected to reach 2091 UHNWIs and Melbourne, 900 UHNWIs.
"The ongoing migration of wealthy people to Australia and New Zealand is helping to underpin wealth populations," said Andrew Amoils, Head of Research at New World Wealth.
North America had the highest proportion of HNWI (those with net assets of more than $US1 million) with 73,100 by December 2016 ahead of Europe at just under 50,000 and Asia at 46,000.