Research News, Thought Leadership – CoreLogic
The number of suburbs in Australia’s million-dollar club has shrunk considerably in the past six months as the weight of rising inflation, consecutive rate hikes and falling property values takes its toll.
Since April, the median value in 169 suburbs around the country have dropped below seven figures while only seven suburbs across capital cities and regional areas have increased in value to $1 million or more.
CoreLogic Research Director Tim Lawless said a significant proportion of more affordable outer ring suburbs in Sydney and Melbourne are no longer recording a median value of $1 million or more.
“We are seeing the more affordable housing markets recording smaller declines, but values are generally trending lower, just not as fast as more expensive areas,” he said.
“Many of these outer fringe suburbs that have fallen below the $1 million mark were previously showing median values that were only marginally over the seven-figure threshold, so in many cases, a small percentage drop in value has been enough to push values below $1 million.”
“Housing values across the most expensive quarter of the market are actually falling faster, but most of these suburbs would need to see values fall significantly further before dragging their medians below the million-dollar mark.”
There are still 836 suburbs nationally with a median value of $1 million or more, including 347 in Sydney and 117 in Melbourne. Mr Lawless said they are the only capitals that have seen a reduction in the number of million-dollar suburbs when comparing to October last year.
“These are also the capital cities where housing values have fallen the most, with Sydney dwelling values down 8.6% over the 12 months to Oct 22 and Melbourne down 5.6%,” he said.
“Hobart was the only other capital to record an annual decline in dwelling values so far (down -1.0%), however we are yet to see this result in fewer million plus suburbs relative to a year ago.”
Despite the decline in value, Australia still has more than double the number of suburbs with median values of $1 million or more than compared to March 2020 and the onset of COVID, when there were 393 million-dollar suburbs.
“The same trend is true across each of the capitals and rest of state areas, including the cities where housing values have fallen the most, like Sydney where there were 257 $1 million-plus suburbs and in Melbourne where there were 85 $1 million-plus suburbs in March 2020,” Mr Lawless said.
Of the seven new million-dollar areas, Adelaide’s Forestville, in the city’s inner south-west and North Brighton, a coastal suburb, joined Burns Beach, 34km north of Perth and Alfred Cove south of the city, were the four capital city suburbs to see a rise in the median value to above $1 million since April.
Regional NSW coastal areas Emerald Beach and Bonny Hills join Bright in Victoria’s High Country as newcomers to the million-dollar club.
Mr Lawless said while Adelaide had only seen median values fall -0.6% since the market peaked in July, the rate of decline had picked up a little.
“Adelaide’s rate of decline has become more pronounced across the upper quartile, where values are down 2.6% since peaking a month earlier in June,” he said.
“With this weaker trend across the more expensive end of the market, its likely we will see some ‘borderline’ million plus suburbs starting to slip below the million-dollar mark over coming months.”
For buyers and sellers, a decline in the number of seven-figure suburbs simply reflects the weaker housing market conditions.
Mr Lawless said the weakness is expected to continue and with a record seventh rate rise forecast in December, it is more than likely the million-dollar club will continue to shrink.
“It is likely values will continue to trend lower across each of the broad valuation cohorts of the market, but while the upper quartile of the housing market has led the downturn, it’s also the sector of the market that is leading the easing in the pace of declines,” he said.
“The trend over the past few months has been towards an easing in the rate of decline, especially in Sydney and Melbourne, so if that trend persists, we may not see an acceleration in the number of suburbs where the median value drops below $1 million dollars.”