More Australian housing markets than ever now have a median housing value of $1 million, according to new research from Cotality.
One in three Australian housing markets now has a median value of $1 million or more, according to new data from property insights firm Cotality, with the number of ‘million-dollar suburbs’ surging 143 per cent across the past five years.
Using data from 4,844 markets nationwide – including 3,514 house markets and 1,330 unit markets – Cotality’s latest Million Dollar Market report found that, as of September, one in three markets (34.1 per cent) had a median property value of $1 million or more.
This figure represents a new record high, up from 30.3 per cent a year earlier.
Cotality’s data also shows some buyers haven’t been deterred by the rising price tags.
Properties with seven-figure values accounted for 30 per cent of all national sales in the year to September – more than double the share recorded in 2020 (15.2 per cent).
Cotality economist Kaytlin Ezzy commented on the dramatic rise in dwelling values.
“Five years ago, just 14.0 per cent of Australian suburbs were members of the million-dollar club, with the majority concentrated in Sydney’s prestigious Northern Beaches, Eastern Suburbs, and North Sydney and Hornsby regions,” she said.
“Since then, dwelling values nationally have risen over by 46.8 per cent or roughly $270,000 at the median level and membership in the million-dollar club has increased by 142.9 per cent.
“Today 41.9 per cent of house and 13.5 per cent of unit suburbs nationally claim a spot on the once prestigious million-dollar list, with seven-figure price tags becoming more commonplace.
“Just 15 per cent suburbs in Sydney now have a median house value under the $1 million mark, all located in the city’s western mortgage belt and Central Coast region. Meanwhile, median house values in Brisbane and Canberra’s broader capital city regions have crossed above the seven-figure threshold.”
Ezzy also commented on the growing number of suburbs with a median unit value above $1 million in areas on the suburban fringes of the major capitals.
“Some newly minted million-dollar markets include more mortgage belt suburbs like Sydney’s Penrith and Melbourne’s Taylors Lakes, along with Oxley in Brisbane’s Ipswich region and Upper Coomera in the Northern Gold Coast,” she added.
“Seven-figure markets are no longer confined to prestigious suburbs, with their reach expanding more broadly.”
Priced out of the market
Ezzy noted the difficulty for borrowers to be able to access housing in such a competitive market, particularly for segments such as first home buyers.
“A household on the average income of $106,000 with a 20 per cent deposit, would need to dedicate more than 50 per cent of their pre-tax earnings to service a loan on a million-dollar property,” she said.
“This increases to more than 60 per cent if they’re using the First Home Guarantee scheme’s 5 per cent deposit, a repayment-to-income ratio few brokers will approve.”
This speaks to home ownership moving out of reach for many.
“While the sheer prevalence of seven-figure property values suggests that many can still access financing, the average age of first-home buyers has continued to creep higher, while home ownership rates have steadily declined, particularly among younger and lower-income households whose earnings struggle to keep pace with rising housing prices,” she added.
“With tight supply levels and additional demand from the expanded First Home Guarantee scheme, values are expected to continue an upward trajectory through 2025, which will likely see more suburbs cross the seven-figure threshold.
“At their current quarterly rate of growth, over 80 markets are on track to join the million-dollar club by year’s end.”
The broker piece
Matt Turner, managing broker at Geelong-based GSC Finance Solutions, said this data was an indication that affordability was getting out of reach for the bottom end of the market.
“Single applicants are finding it difficult to have the capacity to borrow enough to buy a home, this can also be said for upgraders as the jump is growing, especially if they took on a low deposit loan to purchase their existing property,” he said.
“However, those that are in the market are getting the benefit and are leveraging properties they currently own to invest again. We are definitely seeing an uptick in investor interest as values are rising again.”
This makes the education piece vital for brokers, according to Turner.
“Educate them first and foremost. They need to understand the ramifications of spending that bit more for the perfect home vs spending less now and potentially paying to upgrade later. We are also increasingly referring to buyer’s agents for those that have the budget, so that they can find the right property potentially off-market, to avoid the competition,” he said.
“We are also providing guidance on making offers, putting together scenarios for different price points and speaking with agents on clients’ behalf so that everyone is comfortable with their ability to purchase the property.”
[Related: Property investor share of new lending hits 8-year high]
