Australia's luxury property market operates by different rules than standard residential finance. Here's what high-net-worth buyers need to know:
The Australian luxury property market is valued at USD $23.88-$25.25 billion in 2025, with projected growth of 5.75-7.81% annually
Sydney's premium waterfront properties command medians exceeding $40 million (Point Piper, Vaucluse, Balmain)
Melbourne's bayside luxury market ranges $8-$25 million for beachfront properties in Brighton, Sandringham, and Portsea
Foreign buyers represent 35% of luxury property purchases (China/Hong Kong), followed by 22% US and 18% UK
High-net-worth borrowers often access LMI waivers, higher borrowing limits, and interest-only terms up to 10 years
SMSF property loans provide tax-advantaged investment structures for prestige properties
Private banking relationships offer bespoke financing solutions unavailable through standard channels
Australian cities command some of the world's highest waterfront property premiums globally
Buying a luxury property in Australia isn't just a scaled-up version of buying a standard home. The financing works differently, the lenders are different, and the strategies that make sense for a $600,000 first home don't necessarily apply to a $6 million waterfront estate.
Think of luxury property finance like flying business class versus economy. The destination might be the same, but the experience, the options, and the level of service are entirely different. High-net-worth buyers who approach luxury property financing with standard residential loan assumptions often leave significant value on the table.
The Australian luxury property market in 2025 is robust, growing, and attracting global capital. Understanding how to finance in this space requires a different playbook.
Australia's luxury property market isn't a niche—it's a multi-billion-dollar sector with distinct characteristics and momentum.
Valued between USD $23.88 billion and $25.25 billion in 2025, the market is projected to grow at 5.75-7.81% annually through the decade. That's steady, sustained growth backed by limited supply in premium locations, international buyer demand, and Australia's appeal as a stable, lifestyle-focused investment destination.
Unlike entry-level or mid-tier property markets, luxury property doesn't experience the same volatility. Prices don't typically crash in premium waterfront suburbs or prestige locations because supply is fundamentally constrained. There's only so much harbourfront in Sydney, only so much bayside in Melbourne, and only so many properties with the location, views, and features that define true luxury.
Sydney's premium waterfront suburbs aren't just expensive—they're stratospherically priced by global standards, yet they continue to appreciate.
These aren't just addresses; they're brands. Point Piper, with its harbour views, private jetties, and proximity to Sydney's CBD, commands median prices exceeding $40 million for premium waterfront properties. Vaucluse and Balmain sit in similar territory for true harbourfront estates.
What drives these prices? Scarcity, prestige, lifestyle, and global demand. These aren't markets where buyers hunt for bargains. They're markets where buyers compete for irreplaceable assets—properties with 180-degree harbour views, private beach access, or architectural significance.
For high-net-worth buyers, financing these properties requires lenders comfortable with high-value loans, flexible structures, and sophisticated serviceability assessments.
Sydney's luxury properties share common characteristics:
Private jetties or beach access
Panoramic harbour or ocean views
Pools, spas, and resort-style outdoor areas
Multiple levels designed to maximize views and light
Architectural pedigree or designer finishes
Privacy and security infrastructure
Proximity to Sydney's CBD or lifestyle precincts
These aren't features found in standard property—they're what differentiates luxury from simply "expensive."
While Sydney's harbour steals headlines, Melbourne's bayside suburbs are experiencing a renaissance, particularly Brighton, Sandringham, Portsea, and Sorrento.
Melbourne ranks 10th in the International Waterfront Index, with beachfront properties ranging from $8 million to $25 million depending on location, size, and features. That's still luxury, but comparatively accessible versus Sydney's harbour premiums.
What's driving Melbourne's bayside market?
Infrastructure investment improving connectivity to CBD
Lifestyle appeal of beach proximity combined with urban access
Strong local economy supporting high-net-worth buyer demand
Limited beachfront supply constraining inventory
For interstate or international buyers comparing Sydney and Melbourne luxury markets, Melbourne offers better value on a price-per-square-meter basis while still delivering premium lifestyle and capital growth potential.
Australia's luxury property market is decidedly global. Foreign buyers represent 35% of luxury purchases, with China and Hong Kong leading at 35%, followed by the United States at 22% and the United Kingdom at 18%.
Several factors drive international demand for Australian luxury property:
Stability and rule of law
Australia's political stability, transparent legal system, and property rights protections attract buyers from regions with less certainty.
Lifestyle and climate
Waterfront living, beaches, clean air, and a relaxed lifestyle appeal to high-net-worth individuals globally.
Education
Many foreign buyers purchase luxury property to support children studying in Australian universities, particularly in Sydney and Melbourne.
Residency pathways
Significant investor visa programs historically linked investment (including property) to residency opportunities.
Capital preservation
Australian property is viewed as a stable store of wealth, particularly for buyers from countries with capital controls or economic volatility.
Foreign buyers must navigate FIRB (Foreign Investment Review Board) approval for property purchases. This adds complexity and cost but isn't prohibitive for genuine buyers. Understanding FIRB requirements, timelines, and fee structures is essential for international purchasers.
Financing for foreign buyers typically requires larger deposits (20-30% or more) and often involves international private banking relationships rather than standard Australian retail lenders.
Standard home loan products assume standard borrowers: employees with salaries, standard deposits, and predictable financial profiles. High-net-worth buyers often don't fit these moulds, and their financing shouldn't either.
For professionals and high-income earners—doctors, lawyers, executives—many lenders offer LMI waivers at higher LVRs than standard borrowers. Where a typical borrower triggers LMI above 80% LVR, high-net-worth borrowers in specific professions might borrow up to 90% LVR without LMI.
On a $3 million property, avoiding LMI at 90% LVR saves tens of thousands in upfront costs, preserving capital for other investments or liquidity buffers.
Standard borrowers typically access interest-only periods of 1-5 years. High-net-worth borrowers—particularly investors—can access interest-only terms up to 10 years.
Why does this matter? Cash flow flexibility.
Wealthy investors prioritizing cash flow over principal repayment can direct capital toward higher-returning investments while maintaining property exposure. It's not about affordability—it's about capital optimization.
For buyers with significant asset holdings (investment portfolios, businesses, property portfolios), some lenders offer asset-backed lending where loan serviceability is assessed against total asset position rather than just employment income.
This is particularly relevant for self-employed high-net-worth individuals, business owners, and investors whose income statements don't reflect true financial capacity. Asset-backed lending recognises wealth differently than standard income assessment.
At a certain wealth level, financing shifts from retail lenders to private banking divisions. Private banks offer:
Dedicated relationship managers
Bespoke loan structures
Flexible security arrangements (cross-collateralisation across portfolios)
Integrated wealth management (linking loans with investment portfolios, trusts, and estate planning)
Private banking isn't just about getting approved—it's about structuring finance in ways that optimize tax, estate planning, and investment strategy holistically.
Self-Managed Super Funds (SMSFs) allow trustees to purchase property within a superannuation structure, providing tax-advantaged investment for luxury property.
SMSF property loans must comply with specific regulations:
The property must be held on trust (bare trust arrangement)
The SMSF cannot borrow more than allowed by SMSF borrowing rules
The property cannot be lived in by SMSF members or related parties
Rental income and capital gains occur within the SMSF's tax environment (15% on income, 10% on capital gains held >12 months, 0% in pension phase)
For high-net-worth buyers viewing luxury property as investment rather than lifestyle, SMSF structures can provide significant long-term tax savings.
SMSF property investment works best for:
High-income earners seeking concessional tax treatment
Buyers with substantial superannuation balances
Investors focused on long-term capital growth and rental income
Buyers who don't need personal use of the property
SMSF loans typically require larger deposits (20-30%) and carry slightly higher interest rates than standard home loans, but the tax benefits often outweigh financing costs for the right buyers.
While Sydney and Melbourne dominate luxury headlines, Perth's prestige property market offers opportunities often overlooked by interstate and international buyers.
Suburbs like Cottesloe, Peppermint Grove, and Dalkeith combine waterfront living, privacy, and lifestyle at prices substantially lower than Sydney or Melbourne equivalents. Perth's luxury market has historically lagged the eastern capitals, but WA's economic resurgence in 2025 is changing that dynamic.
For buyers seeking luxury property with growth potential, Perth's prestige suburbs represent value relative to Sydney and Melbourne while still offering genuine lifestyle appeal.
Even with high net worth, lenders still assess applications carefully. Understanding what strengthens luxury property finance applications helps buyers position themselves optimally.
Clear income documentation
Even for high-net-worth borrowers, clear income trails matter. Tax returns, financial statements, employment contracts, or trust distributions provide lenders with confidence.
Substantial deposits
Luxury buyers typically provide 20-30% deposits, demonstrating financial capacity and reducing lender risk.
Diversified asset holdings
Borrowers with diverse asset bases (property portfolios, investment portfolios, business interests) present lower risk than those leveraged heavily into single assets.
Property quality and location
Lenders assess property as security. Premium locations with consistent demand, low vacancy, and historical capital growth are viewed more favourably than unique or niche properties with limited buyer pools.
Established banking relationships
Buyers with existing banking relationships, particularly with private banking divisions, often access better terms and faster approvals.
Even sophisticated buyers make missteps when financing luxury property.
Walking into a retail bank branch and asking for a $5 million loan using standard mortgage products rarely ends well. Luxury finance requires specialist lenders, private banking divisions, or brokers who understand high-net-worth lending.
Purchasing luxury property in personal names versus trusts, companies, or SMSFs has significant tax implications. Failing to consider tax structure before purchasing can create expensive problems later.
International buyers who assume Australian property purchases are straightforward often encounter FIRB delays, higher deposit requirements, and financing limitations. Planning ahead matters.
At the luxury end, interest rate isn't always the primary concern. Loan features, flexibility, relationship management, and integration with broader wealth strategies often matter more than saving 0.2% on rate.
Luxury property buyers don't need basic mortgage brokering—they need strategic financial structuring that integrates property finance with tax, wealth management, and long-term goals.
Mountway Finance works with high-net-worth clients to structure finance that goes beyond "getting approved." The approach considers tax efficiency, estate planning, wealth preservation, and growth strategy. Whether purchasing a Sydney harbourfront estate, a Melbourne bayside masterpiece, or a Perth prestige property, the goal is financing that serves the broader wealth picture, not just the transaction.
Luxury property deserves luxury service—not order-taking, but strategic advice from professionals who understand both property markets and high-net-worth financial structures.
Ready to discuss financing for prestige property? The Mountway team brings experience with high-value lending, SMSF structures, private banking relationships, and strategic property finance. Book a confidential conversation today and let's structure your luxury property purchase intelligently.