The million-dollar property market shrinks as median Australian home values decline | Kanebridge News
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The million-dollar property market shrinks as median Australian home values decline

The biggest impact has been on fringe suburbs in Sydney and Melbourne

By Robyn Willis
Thu, Nov 24, 2022 10:07amGrey Clock 2 min

The number of million-dollar suburbs is on the decline, new figures from CoreLogic show.

The property data provider reports that the median value in 169 suburbs around the country has dropped below the $1 million mark since April.

CoreLogic Research Director Tim Lawless said the drop in housing values in more affordable outer ring suburbs was part of a wider trend.

“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.”

Mr Lawless said Sydney and Melbourne were the only capital cities in Australia to experience a reduction in million-dollar suburbs compared to October 2021.

“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.”

With another interest rate increase expected when the Reserve Bank meets again next month, Mr Lawless said it is most likely that values will continue to trend lower, but not at the same pace experienced for much of this year.

“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.” 

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The Lipstick Index Is Back

Sales of the cosmetic product are a bright spot in an otherwise bleak discretionary-goods environment

By JINJOO LEE
Fri, Nov 25, 2022 2 min

Masks off, lipstick index on.

In a gloomy economy, consumers might cut back on other discretionary purchases but will keep shelling out for small luxuries such as lipstick—or so goes the theory. “When lipstick sales go up, people don’t want to buy dresses,” Leonard Lauder, then-chairman of Estée Lauder who is widely credited for coming up with the so-called “lipstick index,” told The Wall Street Journal in 2001.

L’Oréal Chief Executive Nicolas Hieronimus called this out during the company’s earnings call in October, noting that a luxury lipstick or mascara is only €30, making it an “affordable treat.” Sales at L’Oréal rose 9.1% in the third quarter compared with a year earlier despite slower sales in China due to Covid-related lockdowns. Coty, maker of CoverGirl makeup, said organic sales grew 9% over the same period.

Beauty sales have also been a rare bright spot for retailers: Target said beauty category sales grew roughly 15% in its quarter ended Oct. 29 compared with a year earlier, with Ulta Beauty shops in Target tripling their total sales volume over that period.

While Macy’s namesake stores saw comparable-store sales decline last quarter, its beauty-focused Bluemercury chain saw same-store sales grow 14% last quarter compared with a year earlier. Kohl’s locations with Sephora are outperforming the rest of the department-store chain.

Of the 14 discretionary categories that market research firm NPD Group tracks, prestige beauty—products you might find at a department store or a Sephora—is the only category that is seeing unit sales growth year to date. And lipstick, which suffered during the masked-up pandemic, is making up for lost time.

Lipstick sales have grown 37% through October this year compared with a year earlier, according to Larissa Jensen, beauty industry analyst at NPD Group. That is an acceleration from the 31% growth seen during the same period last year. Lip product is the only major category within prestige beauty where sales are actually up compared with pre-pandemic levels, according to Ms. Jensen.

Cosmetic companies have also called out strong sales in fragrances, calling it the “fragrance index.” Demand has been so robust that there is an industrywide fragrance component shortage, Coty said in a press release announcing third-quarter earnings earlier this month. CEO Sue Nabi said during the call that Coty hasn’t seen any kind of trade-down or slowdown, also noting that consumers are shifting away from gifting perfume to buying it for themselves.

“A big piece of it is just a shift in what wellness means to consumers,” NPD Group’s Ms. Jensen said. “Beauty is one of the few industries that are positioned to meet [consumers’] emotional need. It makes them feel good.”

While the lipstick effect could be observed in the recession in the early 2000s, that wasn’t the case during the 2007-09 recession, during which lipstick sales declined alongside other discretionary purchases. Part of this might have had to do with category-specific dynamics.

There was a lot of newness in the cosmetic industry in 2001, including lip gloss, a relatively nascent category back then. That tailwind simply wasn’t there starting in 2008, though nail polish turned out to be consumers’ small indulgence of choice in that period. This time around, consumers may be eager to show off a part of their face that was hidden behind a mask for so long during the pandemic.

In an otherwise bleak environment for companies selling discretionary goods, those in the business of selling cosmetics look well poised to come out of the holiday season looking freshened up.

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