Buyers continue to battle it out for homes in affordable suburbs as luxury property prices decline.
Over the past year, dwelling values in the most expensive suburbs have fallen 1.6 per cent nationally, while values in the most affordable areas have risen 1.9 per cent, according to CoreLogic.
In the first quarter of 2018, property prices in the most affordable 25 per cent of suburbs rose 0.7 per cent nationally, while the middle 50 per cent of the market rose 0.3 per cent in value.
By contrast, dwelling values in the luxury end of the property market – the most expensive 25 per cent of suburbs – fell by 1.1 per cent nationally.
In Sydney, Australia’s most unaffordable city, the most expensive areas declined in value by 5.7 per cent over the past 12 months, followed by the middle half of the market which fell 0.9 per cent, while dwelling values in more affordable areas rose 0.6 per cent.
Despite slowing growth, property values in Melbourne, the nation’s second-most unaffordable city, continued to rise over the past 12 months.
Melbourne’s most affordable areas recorded an 11.3 per cent increase in home values annually, while the most expensive suburbs recorded growth of just 1.6 per cent.
According to Advantage Property Consulting director Frank Valentic, the top end of town is “always the first to feel the effects of any softening in the market”, as the buyer pool thins out.
“Blue-chip properties within affordable upper-middle class suburbs that are predominantly [made up of] family homes are always fairly safe investments and tend to weather any financial climate well,” he said.
“It is once you get over the $3 million price-point that I think the market becomes patchy and you start to see people tightening up in their spending.”
According to Mr Valentic, “elite” properties at “the very top end of the market” – with price tags of $15 million or above – may be immune to the market’s current machinations.
“I think the very pinnacle of the property market is still a reasonably healthy market at this stage. Most people who are looking to spend tens of millions on a property are not looking at short-term real estate cycles,” he said.
“They are always looking at long-term holdings and because of this, I do think any softening we have seen recently in the marketplace has not yet affected our prestige buyers at the top end of the market.”
First home buyers make their mark
While luxury property buyers consider their options, first home buyers continue to surge nationally.
There were 8782 housing-finance commitments by first home buyers in February 2018, a rise of 33.1 per cent compared with the same time last year, according to CoreLogic figures.
First home buyers in Victoria and New South Wales also benefited from the introduction of state government stamp duty exemptions on July 1 last year.
“Since late 2017, dwelling values have been falling in a number of cities, most notably Sydney and Melbourne, which have also been the two cities in which values have increased at the fastest pace over recent years,” CoreLogic head of research Tim Lawless said.
“The slowdown in housing market conditions is being driven by higher-valued dwellings while lower-valued stock is holding its value much better.
“This is most likely linked to first home buyer incentives and stamp duty concessions which are supporting demand across the lower-valued housing stock.”
Across the country, the number of first home buyer commitments were higher in all states compared with last year, with the exception of Western Australia which was down 0.1 per cent.
The ACT recorded a 177.7 per cent rise in first home buyers, followed by NSW (+103.3 per cent), Victoria (+38.6 per cent), NT (+26.8 per cent), SA (+17.8 per cent), Queensland (+3.8 per cent), and Tasmania (+2.2 per cent).