Melbourne's $5M+ market: who's actually buying in 2024

The composition of buyers competing for Melbourne's most exclusive residential properties, those commanding prices upwards of $5 million, has undergone a significant recalibration over the past three years. Traditionally, this upper stratum of the property market has been largely underpinned by a trinity of buyer cohorts: local executive owner-occupiers, expatriates returning home, and high-net-worth foreign buyers. The latter group, in particular, has historically seen substantial representation from mainland China, with additional contributions from Hong Kong, Singapore, and Malaysian Chinese-Australian investors. In 2024, the interplay among these three groups has fundamentally shifted.

The demand emanating from local executive owner-occupiers has evidently thinned. This trend is not entirely surprising, given the prevailing economic environment. Melbourne's corporate landscape, particularly in sectors that traditionally foster high-earning executive roles such as investment banking, management consulting, and resources or mining services, has experienced a net negative growth in senior positions through 2024. Furthermore, the bonus environment across many of these industries has been decidedly subdued, a direct consequence of tighter economic conditions and a generally cautious sentiment. This confluence of factors has directly impacted the cohort of buyers who, in more buoyant times, could comfortably commit to an approximately $6 million to $8 million family home from current cashflow and established accumulated wealth. Their capacity for such significant liquid outlays has demonstrably diminished, leading to a softer presence in this high-end segment. Buyers who might once have comfortably competed for residences in suburbs like Toorak, South Yarra, or Canterbury, particularly those seeking larger, more aspirational family estates, are now exercising greater restraint or may be targeting slightly lower price points.

Conversely, the flow of returning expatriates has notably strengthened, becoming a pivotal force in the current high-end market. Australians electing to return from major global financial and cultural hubs such as Singapore, Hong Kong, London, and New York are arriving with substantial deposits. Crucially, a significant portion of these deposits are held in foreign currencies that have enjoyed an 8% to 14% appreciation against the Australian dollar between 2022 and 2024. For these returning ex-pats, this currency differential acts as an effective discount on Melbourne's premium property prices. What might appear as a $7 million property on paper, for example, represents a significantly lower out-of-pocket cost when converting their foreign-denominated wealth. This favourable exchange rate dynamic has effectively softened the perceived purchase price for these buyers, making Melbourne's high-value properties more attainable than they might initially seem. This cohort is now arguably the most active single buyer group in the inner-east’s $5 million to $10 million segment. They are particularly active in suburbs renowned for their schooling options and lifestyle, such as Kew, Hawthorn, Armadale, and Malvern, where demand for substantial family homes remains robust.

The third traditional pillar, that of high-net-worth foreign buyers, has seen a considerable compression in activity. Data on Foreign Investment Review Board (FIRB) approval volumes for residential purchases by foreign buyers in Victoria indicates a reduction of approximately 35% compared to the 2018-2019 baseline. Several factors contribute to this decline. Primary among them are the ongoing capital controls implemented by the Chinese government, which have made it increasingly challenging for Chinese citizens to move large sums of money offshore for property investment. Beyond this, Victoria has layered on two substantial additional costs that significantly deter overseas buyers. The first is an 8% additional foreign buyer duty, levied on top of the standard stamp duty rates. The second is an annual 4% absentee owner surcharge on land tax, which applies to foreign owners who do not ordinarily reside in Australia. When combined, these imposts can add well over a million dollars to the acquisition cost of a $10 million property, making the investment proposition considerably less attractive compared to previous years or other global markets. This tightening of conditions has led to a noticeable reduction in direct foreign buyer competition, particularly for ultra-luxury properties that might once have seen multiple offshore bids.

The practical implications of these shifts are tangible across Melbourne's top-tier market. For properties specifically priced into the sweet spot for returning expatriates, typically in the $5 million to $8 million range, especially those located in premium school catchments and configured as established family homes, competition remains fierce. These homes, often in suburbs like Camberwell, Balwyn, Brighton, or even some parts of Albert Park, are beneficiaries of the strong purchasing power and urgent settlement needs of returning Australians. Demand for quality, renovated or well-maintained period homes with family-friendly layouts in these areas continues to hold firm.

Conversely, properties positioned at the more traditional Melbourne executive bracket, encompassing those typically valued between $8 million and $12 million, particularly those on ultra-prestigious streets or offering larger land holdings in areas such as Toorak, Kooyong, or South Yarra, are experiencing a softer market than headline media reports might suggest. While these properties still transact, the depth of buyer pool is shallower. The reduced executive owner-occupier demand and the significant drop-off in foreign buyer interest mean that properties in this upper echelon may take longer to sell, and vendors may need to adjust price expectations more significantly than those in the band favoured by returning expats. The pressure to negotiate, particularly from savvy local buyers who are less influenced by currency arbitrage, is more pronounced in this segment. The days of multiple, rapid-fire bids for every top-end trophy home have certainly abated, replaced by a more considered and often protracted sales process for these truly aspirational assets.