The track record of property as a high-quality investment has been underlined again by new data showing the number of homes now valued at more than $1 million has increased by almost 25% in the past decade.
Fewer than 10% of properties could boast $1 million values back in April 2015, but now that figure stands at 34.7%, according to industry research Cotality (formerly CoreLogic).
Overall, values have risen 67.3% across all capital cities in the past 10 years, it says.
Cotality released a thought-provoking article widely quoted in the media about the number of homes that have pushed through the $1m threshold.
To some, it illustrated the social inequity of the housing market and underlined the struggles younger Australians face in buying a first home. To others, it was further evidence of real estate’s performance as an excellent investment.
Both perspectives are valid.
Values are contextual, of course. The key factor is the buyer’s ability to finance the loan used for the purchase.
That’s why we watch interest rate trends so keenly.
A number of factors have accelerated values, predominantly the shortage of properties and the level of immigration, which stood at 466,000 (net) for the 2023-2024 financial year.
Affordability has not only been affected by rising prices but also factors such as wage stagnation, which has made property purchase more challenging for Gen Z and Millennials.
Cotality says: “Housing debt has also blown out to keep pace with rising values relative to more subdued wages growth. Housing debt relative to income was recorded by the RBA at 135% at the end of last year. This was up from 122% a decade prior.”
The Cotality report reveals several fascinating property market facts. They include:
Median average – The average value of a home in Australia hit the $1m landmark last August, mainly thanks to rising prices in Perth, Brisbane and Adelaide.
Capitals grow – Only 14.3% of properties in every state and territory capital was valued at $1m in 2015. Now that figure is 41.6%.
Regional explosion – Almost one-fifth (19.4%) of homes in regional Australia are now worth more than $1m – up from 0.5% in 2015.
Sydney rules – The city has the highest portion of homes over $1 million. Some 64.4% of all housing stock is in the million-dollar-club. The city’s median value of all houses and units is $1,195,000.
Brisbane is No.2 – Some 40.2% of homes are valued at $1m or more – up from just 2.8% a decade ago. Cotality says Brisbane will “almost certainly” be Australia’s next million-dollar house market. Its current average price is $990,000.
Fast followers – Adelaide (27.8%) and Perth (25%) are following a similar trajectory to Brisbane.
Melbourne slips – Some 30.9% of its homes have a $1-million-plus value, a fall from its all-time high of 33.1% in January 2022. Melbourne is No.3 in the million-dollar club, behind Sydney and Brisbane.