Australia’s real estate market, renowned for its resilience, has taken an unexpected waltz with downturns in recent times. CoreLogic, a leading authority on property data, reveals a rather surprising trend in its latest reports. The million-dollar club in Australia’s housing market has witnessed a substantial thinning of ranks, with only 22.3% of the 4,436 house and unit markets analysed nationally having a median value at or above $1 million as of May 2023, down from 28% last year.
This contraction in high-value property markets is largely attributed to a series of interest rate hikes over the past year, marking a departure from the record number of markets that boasted median values of $1 million or more a year ago. The national Home Value Index, according to CoreLogic, experienced its steepest ever decline, plummeting by 9.1% over a ten-month period from April 2022 to February 2023. While there has been a modest recovery of 2.3% over the past three months, national dwelling values are still 6.9% below their recent peak1.
Sydney, which saw a severe peak-to-trough decline of -13.8%, has had the largest number of suburbs falling below the million-dollar mark, with 78 house and unit markets witnessing a slump in values. Interestingly, the suburbs where values have fallen below $1 million are the more affordable locations on Sydney’s outer mortgage belt and fringe areas1.
The story is similar across other states as well. The Central Coast saw the number of million-dollar markets halve, with many regions in NSW and Queensland experiencing a downward trend. House and unit markets in Melbourne and Canberra also witnessed a considerable drop in median values of -9.3% and -8.8% respectively over the past year, leading to a reduced portion of markets with a median value of $1 million or higher1.
In Tasmania, the annual decline in Hobart dwelling values was -12.6%, causing six house markets to fall out of the million-dollar club. Adelaide also saw house values in four suburbs dip below seven figures, despite the city recording a mild 0.4% increase in dwelling values over the year1.
Perth, however, displayed some resilience. The city’s North West welcomed a new member to the million-dollar club, the suburb of Burns Beach, even as houses in the South East suburb of Shelley left the club. The relatively affordable property prices, low listings levels, and a tight labour market helped the city weather the recent downswing1.
Despite the shrinking number of million-dollar markets across Australia, CoreLogic notes that the portion of properties selling for $1 million or more has remained fairly steady over the year to March, suggesting high-end buyers are still active in the market1.
