Luxury buyers return to Sydney and Melbourne as prestige markets rediscover their shine

Australia's prestige property market is shifting once again, with new data revealing Sydney and Melbourne may be on the verge of a luxury rebound after years of underperformance against fast-rising lifestyle markets.

For the past five years, luxury growth has been dominated by places once considered fringe contenders, Brisbane, Perth, Adelaide and the coastal hotspots of Southeast Queensland.

The pandemic reshaped buyer priorities, giving high-end purchasers permission to chase beachfront living, lifestyle space and relative value outside the traditional blue-chip capitals.

But according to a new report by Ray White the tide may now be turning.

Prestige markets that once lagged are catching up

Sydney's luxury market grew 6 per cent between 2024 and 2025, building on a modest 2 per cent rise the previous year to finally hit a new peak price of $4.5 million.

Melbourne, while still yet to reclaim its pandemic-era peak, recorded a 5 per cent lift in 2025 following a 1 per cent decline in 2024, finishing the year at $2.6 million.

Over five years, the numbers tell the full story:

Sydney: +35 per cent

Melbourne: +17 per cent

Brisbane: +77 per cent

Perth: +76 per cent

Adelaide: +73 per cent

Gold Coast: +72 per cent

Sunshine Coast: +68 per cent

The surge in lifestyle markets has been so strong that the Sunshine Coast ($2.76 million) and Gold Coast ($2.86 million) have overtaken Melbourne ($2.62 million) as Australia's second- and third-most expensive luxury markets.

Meanwhile, Brisbane ($2.32 million) and Perth ($2.30 million) are now just 12 per cent cheaper than Melbourne, compared with a hefty 43 per cent discount in 2020

Atom Go Tian, Ray White Group Senior Data Analyst says the pendulum is starting to swing back towards the traditional prestige heartlands.

"When the pandemic accelerated trends of lifestyle migration and people were given permission to look elsewhere for housing, luxury buyers proved themselves to be the most flexible and flocked away to where luxury was still sold at a discount. As a result, luxury growth has largely overlooked Sydney and Melbourne."

"Luxury prices in the two major cities spiked momentarily in 2021 as the initial COVID boom lifted all markets, only for both to lose half their gains the following year as interest rates surged and lifestyle migration gained popularity. From early 2023 onwards, the cities have struggled to return to this COVID peak, with the last 12 months proving to be their most productive."

In 2020, Sydney's prestige premium was stark - double the price of the Gold Coast and Sunshine Coast and two and a half times the price of Brisbane and Perth.

Today, that gap has narrowed to around one and a half times for the SEQ coasts and just under double the amount for Brisbane and Perth, a shift that is refocusing attention back to core prestige suburbs.

Sydney steady, Melbourne poised for a bigger comeback

Go believes Sydney's premium now looks more justified than inflated, driven by supply constraints, its global city status and the enduring pull of harbour-side and beach-front prestige pockets.

Melbourne is a trickier case. Its slower recovery has been shaped by the economic fallout of its world-record lockdown period, which softened demand from exactly the cohort of wealthy buyers who could choose to live anywhere.

Yet paradoxically, it's because of Melbourne's weakness that it might be the better luxury bet for 2026. At only 17 per cent growth over five years, it significantly underperformed relative to its fundamentals as Australia's second-largest city.

Go concluded, "If the rate-cut cycle delivers and confidence returns, the luxury buyers who fled Sydney and Melbourne may find themselves returning to markets that now offer better relative value than they've seen in years."