Australian Housing Market Plunges, Making Million-Dollar Club the Ultimate Status Symbol

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As the Australian housing market plunges, the coveted million-dollar club emerges as the ultimate status symbol, creating a stark divide in wealth and privilege.

Last year, CoreLogic’s report on million-dollar markets showcased many suburb-level housing and unit markets with median values of $1 million or more. However, after a year marked by 12 interest rate increases, the exclusivity of the million-dollar club has intensified, as many of last year’s newcomers now fall below the million-dollar threshold.

From April 2022 to February 2023, CoreLogic’s National Home Value Index experienced its most significant recorded decline, plummeting 9.1% within ten months. Although national dwelling values have partially recovered by 2.3% in the past three months, they remain 6.9% below the recent peak.

As of May 2023, a mere 988 (22.3%) out of the 4,436 house and unit markets analysed nationally boasted a median value of $1 million or more, which is a decrease from last year’s 1,243 (28.0%) during the same period.

Million-Dollar Club Shaken: Sydney Takes a Dive, But One Coastal Gem Makes the Cut!

CoreLogic Economist Kaytlin Ezzy revealed that within the past year, 237 house and 19 unit markets saw their median values drop below $1 million. Only Burns Beach, a coastal suburb 34 kilometres north of Perth’s CBD, joined the million-dollar club as a new entrant.

Sydney faced the most substantial decline in suburbs falling below the million-dollar mark, with 78 house and unit markets experiencing a value dip.

Ms Ezzy mentioned that Sydney’s dominance on the list is unsurprising, given its record peak-to-trough decline of 13.8% in values. She further explained that while declines across Sydney’s pricier markets were among the most significant in the country, these markets had relatively high starting points that allowed them to retain their seven-figure price tags.

“The trend we observe among suburbs where values have fallen below $1 million is that they are located in more affordable areas on Sydney’s outer mortgage belt and fringe regions. Despite experiencing smaller declines, these suburbs have dropped below the million-dollar threshold in median values,” she stated.

NSW and QLD Regions Face Price Plunge

Regarding New South Wales (NSW) and Queensland, the number of million-dollar markets in the Central Coast decreased by half, from 33 to 17. Additionally, house values in 33 suburbs across the South West (-15), Outer South West (-10), and Outer West and Blue Mountains (-8) regions also dipped below the $1 million mark.

Popular Aussie Regions Hit by Housing Slump

A similar pattern emerged in Brisbane, where 41 suburbs experienced a decline, as well as in some of Regional Queensland’s commutable lifestyle markets, such as the Sunshine Coast (-13) and Gold Coast (-10). Regional NSW markets, including Newcastle and Lake Macquarie (-12), Illawarra (-5), and the Southern Highlands and Shoalhaven (-7), also observed a decline.

Ms Ezzy explained, “These regions greatly benefited from the upswing during COVID, thanks to flexible working arrangements, lifestyle advantages, and relative affordability, making them attractive options for buyers. However, the surge in values during the pandemic also made these markets more vulnerable to the rising cost of debt, leading many recently established million-dollar suburbs to fall below the seven-figure mark.”

Melbourne and Canberra’s Million-Dollar Meltdown: Property Values Take a Tumble

In Victoria and the Australian Capital Territory (ACT), Melbourne and Canberra experienced a decline in dwelling values by 9.3% and 8.8%, respectively, over the 12 months leading up to May. Consequently, the proportion of house and unit markets with a median value of $1 million or higher dropped to around 30% in May, down from 35.4% and 41.5% during the same period in 2022.

Several markets in Regional Victoria, including popular tourist and lifestyle towns like Daylesford near Hepburn Springs and Portarlington on the Bellarine Peninsula, also fell below the million-dollar mark.

Hobart and Adelaide Homes Lose Their Pricey Prestige

In Tasmania and South Australia, Hobart witnessed a significant annual decline of 12.6% in dwelling values. As a result, six house markets dropped out of the million-dollar club, leaving only two suburbs, Sandy Bay ($1,243,407) and Tranmere ($1,023,062), with median house values above $1 million. Additionally, four suburbs in Adelaide experienced a dip below seven figures, despite the city’s mild 0.4% increase in dwelling values over the year.

Perth’s Million-Dollar Club Holds Steady: Burns Beach Makes Waves While Shelley Waves Goodbye

Perth’s number of million-dollar markets remained steady, with Burns Beach ($1,033,741) in the city’s northwest being the only new addition to the million-dollar club. At the same time, Shelley ($998,499) in the southeast exited the club.

“Values across Perth exhibited considerable resilience during the recent downswing due to its relative affordability, low listings levels, and tight labour market, which contributed to a new high in values reached in May,” Ms Ezzy noted. 

She added, “With its prime beachfront location, marine park, and popularity among families, house values in Burns Beach increased by 4.1% over the year, making it Australia’s newest million-dollar market.”

Ms Ezzy acknowledged that the decline in million-dollar markets may disappoint some homeowners. However, she emphasised that many markets still record values significantly higher than those at the pandemic’s beginning.

“Despite the decrease in the number of million-dollar markets across Australia, the proportion of properties selling for $1 million or more has remained relatively steady throughout the year until March, accounting for almost one in four properties. This suggests that high-end buyers are still active in the market,” she explained.

Ms Ezzy further highlighted the impact of the cash rate on the performance of million-dollar suburbs. Historically, increases in the cash rate have exerted downward pressure on market values, and economists and banks have raised their forecast for peak rates following the rise in June. Consequently, the return of some house and unit markets to the million-dollar club will be delayed.

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