More Than 1 In 5 Australian Homes Sold for +$1 Million

A record number of Australians spent $1 million or more to purchase a home in the past 12 months according to CoreLogic’s annual Million Dollar Markets report.

Over the year to March 2022, CoreLogic collected 596,733 sales nationally up 19.8% from the 497,923 recorded over the previous year. Of those sold this year, 23.8% sold for $1 million or more.

In the year to May, an additional 497 markets 450 houses and 37 unit markets) joined the million-dollar club bringing the total markets to 1367 or 30.4% of house and unit markets analysed in May to a median value of $1 million or more.

“High consumer sentiment, tight advertised supply, and low-interest rates fuelled strong home value growth throughout 2021, resulting in a new record high annual growth rate of 22.4% over the 12 months to January,” said CoreLogic Research Analyst Kaytlin Ezzy.

“Despite values having risen across all capital cities and rest of state areas annually, we have seen a divergence in growth conditions across markets over the year to date.

“Since January, dwelling values across Sydney and Melbourne have started to decline, while values have continued to rise across South Australia and Queensland. More recently, Canberra, which had previously recorded many months of consecutive growth, recorded its first falls in dwelling values in some years in May.”

Sydney suburbs made up 26.3% of the new million-dollar markets with more than half of all Sydney sales over the 123 months to May transacting at or above $1 million.

In Sydney, 448 house and 104 unit markets have a current median value of $1 million dollars or higher, an increase of 26.6% from the previous year. The new million-dollar markets are largely concentrated in the city’s South West (30) and Outer South West (15) as well as the Central Coast region (20).

In the year to May, 51.9% of transactions in Sydney sold for $1 million or more. Bellevue Hill in Sydney’s Eastern Suburbs is the most expensive house market, both across Sydney and nationally, with a current median value of $8,024,682.

Elsewhere, in Melbourne 212 house and 11 unit markets had a median value at or above $1 million in May majority of which are located in Melbourne’s Inner (39), Inner South (42), Inner East (30) and Outer East (30).

There has been a substantial increase in the number of Australians earning high incomes who are renting their homes instead of owning them, and this may be another element contributing to higher market demand and continually rising rents, according to new research.

The portion of households with an annual income of $140,000 per year (in 2021 dollars), went from 8 percent of the private rental market in 1996 to 24 percent in 2021, according to research by the Australian Housing and Urban Research Institute (AHURI). The AHURI study highlights that longer-term declines in the rate of home ownership in Australia are likely the cause of this trend.

The biggest challenge this creates is the flow-on effect on lower-income households because they may face stronger competition for a limited supply of rental stock, and they also have less capacity to cope with rising rents that look likely to keep going up due to the entrenched undersupply.

The 2024 ANZ CoreLogic Housing Affordability Report notes that weekly rents have been rising strongly since the pandemic and are currently re-accelerating. “Nationally, annual rent growth has lifted from a recent low of 8.1 percent year-on-year in October 2023, to 8.6 percent year-on-year in March 2024,” according to the report. “The re-acceleration was particularly evident in house rents, where annual growth bottomed out at 6.8 percent in the year to September, and rose to 8.4 percent in the year to March 2024.”

Rents are also rising in markets that have experienced recent declines. “In Hobart, rent values saw a downturn of -6 percent between March and October 2023. Since bottoming out in October, rents have now moved 5 percent higher to the end of March, and are just 1 percent off the record highs in March 2023. The Canberra rental market was the only other capital city to see a decline in rents in recent years, where rent values fell -3.8 percent between June 2022 and September 2023. Since then, Canberra rents have risen 3.5 percent, and are 1 percent from the record high.”

The Productivity Commission’s review of the National Housing and Homelessness Agreement points out that high-income earners also have more capacity to relocate to cheaper markets when rents rise, which creates more competition for lower-income households competing for homes in those same areas.

ANZ CoreLogic notes that rents in lower-cost markets have risen the most in recent years, so much so that the portion of earnings that lower-income households have to dedicate to rent has reached a record high 54.3 percent. For middle-income households, it’s 32.2 percent and for high-income households, it’s just 22.9 percent. ‘Housing stress’ has long been defined as requiring more than 30 percent of income to put a roof over your head.

While some high-income households may aspire to own their own homes, rising property values have made that a difficult and long process given the years it takes to save a deposit. ANZ CoreLogic data shows it now takes a median 10.1 years in the capital cities and 9.9 years in regional areas to save a 20 percent deposit to buy a property.

It also takes 48.3 percent of income in the cities and 47.1 percent in the regions to cover mortgage repayments at today’s home loan interest rates, which is far greater than the portion of income required to service rents at a median 30.4 percent in cities and 33.3 percent in the regions.

More Than 1 In 5 Australian Homes Sold for +$1 Million

In the year to May, an additional 497 markets joined the million-dollar club.

This may be contributing to continually rising weekly rents