Membership to the million-dollar club has become more exclusive, as the number of house and unit markets at the suburb level with a median value of $1 million or more has dwindled from the record number of million-dollar suburbs this time last year, CoreLogic reported.
Between April 2022 and February 2023, CoreLogic’s national Home Value Index plunged -9.1% in 10 months, the sharpest decline on record; while national dwelling values bounced back by 2.3% over the past three months but were still down -6.9% from the recent peak.
As of May, just 22.3% (988) of the 4,436 house and unit markets analysed by CoreLogic nationally had a median value of $1m or above – that’s down from 28% (1,243) this time last year.
Kaytlin Ezzy (pictured below), CoreLogic economist, said 237 house and 19 unit markets dropped out of the million-dollar club in the past year, while Burns Beach, a coastal suburb 34 kilometres north of Perth’s CBD, was the lone new entrant.
Sydney saw the largest decline in suburbs falling below $1m, with 78 house and unit markets posting a drop in values to below seven figures. Sydney topping the list was unsurprising though given that the city had recorded the largest peak-to-trough decline in values of -13.8%.
“While declines across Sydney’s more expensive markets were some of the largest across the country, many of these markets had a relatively high starting point allowing them to retain the seven-figure price tags,” Ezzy said.
“The trend among the suburbs where values have fallen below $1m is in the more affordable locations on Sydney’s outer mortgage belt and fringe areas. Despite recording smaller declines it’s these suburbs where median values have dropped [below the] million-dollar threshold.”
NSW and Queensland
Over the past year, the number of million-dollar markets in the Central Coast tumbled from 33 to 17. House values in 33 suburbs across the South West (-15), Outer South West (-10), and Outer West and Blue Mountains (-8) regions also fell below the $1m mark.
An identical pattern was seen in Brisbane (-41) and across some of Regional Queensland’s commutable lifestyle markets, including the Sunshine Coast and Gold Coast (down -13 and -10, respectively) as well as the Regional NSW markets of Newcastle and Lake Macquarie (-12), Illawarra (-5), and the Southern Highlands and Shoalhaven (-7), CoreLogic reported.
“These regions benefited greatly through the COVID upswing, with flexible working arrangements, lifestyle benefits, and relative affordability, all of which made them attractive options for buyers,” Ezzy said.
“However, the COVID surge in values also made these markets more sensitive to the rising cost of debt, with many recently minted million-dollar suburbs falling below the seven-figure mark.”
Victoria and the ACT
With dwelling values in Melbourne and Canberra dropping -9.3% and -8.8%, respectively, over the 12 months to May, the portion of million-dollar suburbs declined by roughly 30% in May, down from 35.4% and 41.5%, respectively, from the same period last year.
In regional Victoria, the markets that fell below $1m included Daylesford, near Hepburn Springs, and Portarlington on the Bellarine Peninsula.
Tasmania and SA
In Hobart, the -12.6% fall in dwelling values saw six house markets fall out of the million-dollar club, leaving just Sandy Bay ($1,243,407) and Tranmere ($1,023,062) with a median house value over $1m. Four suburbs across Adelaide saw their house values slip below seven figures, despite the city recording a mild 0.4% rise in dwelling values over the year.
WA
Across Perth, the number of million-dollar markets held steady, with houses in Burns Beach ($1,033,741), in the city’s North West, being the sole new entrant to the million-dollar club, while houses in Shelley ($998,499) in the city’s South East left the club.
“Values across Perth were fairly resilient though the recent downswing due to its relative affordability, low listings levels, and tight labour market, which helped push values to a new high in May,” Ezzy said.
“With a prime beach-front location, marine park and popularity among families, house values in Burns Beach rose 4.1% over the year, to become Australia’s newest million-dollar market.”
Million-dollar question
Despite the decline of seven-figure markets across Australia, many markets are still recording values significantly higher than at the start of the pandemic, with nearly one in four properties selling for $1m or more over the year to March. This, according to Ezzy, suggests that “high-end buyers are still active in the market.”
“The cash rate will have an impact on the performance of million-dollar suburbs,” she said. “Historically, increases in the cash rate have put downward pressure on market values and many economists and banks have lifted their forecast for where rates might peak following June’s increase. It’s likely this will delay the return of some house and unit markets to the million-dollar club.”
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