The share of Australian homes selling for seven-figures – an unthinkable sum a decade ago – has risen to a record high, with Sydney nearing the half-way mark, according to new research.
Property data firm CoreLogic reported this week 23.2 per cent of all Australian capital city homes sold in 2016-17 were over the million-dollar mark – up almost two whole percentage points, from 21.5 per cent, on the previous 12 months.
Sydney led the price inflation, with nearly half (47.8 per cent) of all houses in Australia’s biggest city selling in 2016-17 for at least $1 million. Ten years earlier, it was only 13.8 per cent.
The Melbourne market had only a quarter (25.9 per cent) of million-dollar homes, but this was well up from a decade ago, at only 5.8 per cent.
CoreLogic head of research Cameron Kusher said the data “highlights the ongoing deterioration” in housing affordability.
“Although the federal government attempted to address housing affordability in the budget this year, it is clear that in order to improve housing affordability there is much more work to be done on both supply and demand drivers of the market,” he said in a statement.
The Australia-wide average was dragged lower by cheaper states such as Tasmania. Overall, 15.4 per cent of homes sold nationally in 2016-17 were at least $1 million, up from 14.4 per cent.
“Bracket creep should come as no surprise in markets like Sydney and Melbourne, where dwelling values have increased by 77 per cent and 61 per cent respectively over the past five years,” Mr Kusher said.
“With dwelling values continuing to climb it is anticipated that in another 12 months an even higher proportion of sales will be sitting at or above $1 million.”
Many experts predict that property prices will grow slower in coming months, but continue to rise nonetheless, with factors such as immigration, a potential pickup in the economy, persistently low interest rates, and state and federal government benefits for first-time buyers.
In the minutes of the Reserve Bank’s August rates decision, published on Tuesday, the central bank said there were “signs” that the Sydney and Melbourne property markets “had eased somewhat”, but that price growth “remained relatively strong”.
“In some other housing markets, prices had been declining,” the RBA said.
“Borrowers investing in residential property had been facing higher interest rates and growth in credit to investors had eased, but overall housing credit growth had continued to outpace the relatively slow growth in household incomes.
However, the central bank warned that rising mortgage debt, coupled with a housing market downturn, could constrain consumer spending, with harmful consequences for the economy.
The RBA left the official cash rate at a record-low 1.5 per cent in August.