The number of homes selling below $400,000 continues to trend lower | Cameron Kusher

As capital city dwelling values continue to rise, homes selling at a price below $400,000 continue to decline, down to 39.7% of all sales from 44.1% a year earlier.

Over the 12 months to August 2014, 37.3% of houses and 45.7% of units sold for less than $400,000.

At the same time a year earlier, 42.3% of houses and 48.5% of units sold for less than $400,000.

Over the past few years there has been a substantial decline in the number of homes selling below $400,000.

 

capital city home sales

 

Note that until 2004 the proportion of sales below $400,000 was fairly similar between houses and units.

Since that time the proportion of sales below $400,000 has trended lower however, the rate of decline has been greater for houses than for units.

Given the significant divergence in individual capital city home values and growth over recent years there is also a large difference in the proportion of homes selling below $400,000.

Over the past year, the proportion of all house sales occurring below $400,000 has been recorded at: 12.1% in Sydney, 25.1% in Melbourne, 32.4% in Brisbane, 47.9% in Adelaide, 15.3% in Perth, 62.8% in Hobart, 18.5% in Darwin and 7.5% in Canberra.

Looking back 20 years, more than 9 out of every 10 house sales across each capital city were below $400,000.

Of course over that time wages have increased, interest rates have tended to be much lower and credit has become much more freely available.

Nevertheless the drop in affordable housing (whether $400,000 is affordable or not is of course up for debate) across most capital cities has been substantial.

 

capital city home sales 12

 

Over the past 20 years there has been an increasing prominence of unit product across capital cities, particularly those located along the Eastern Seaboard.

What about apartments?

Although unit supply has increased, like houses, units have also seen a sharp decline in sales below $400,000.

Across the capital cities, the proportion of total unit sales below $400,000 over the past 12 months was: 23.5% in Sydney, 37.3% in Melbourne, 53.8% in Brisbane, 67.8% in Adelaide, 38.2% in Perth, 82.9% in Hobart, 32.0% in Darwin and 39.0% in Canberra.

Again 20 years ago almost every unit sold was less than $400,000.

While there has been a decline in unit sales under $400,000 across the board it has been markedly larger in markets like Sydney, Melbourne, Darwin and Canberra.

 

capital city home sales 12 2

 

When you look at dwelling sales over time it is important to remember that houses still outnumber units by a long way so house sales have a bigger influence on the overall result.

The chart of dwelling sales over time below $400,00 shows declines across each city with far fewer sales now occurring under $400,000 in Sydney, Melbourne and Perth compared to Brisbane and Adelaide.

 

major capital city

 

Less affordable housing

The supply of affordable housing options, particularly in cities such as Sydney, Melbourne, Perth, Darwin and Canberra has reduced sharply over the past two decades.

Although borrowing for a mortgage has become easier and wages have grown, the supply of lower priced homes drives many lower income earners out of ownership in these cities.

For example current figures to the 12 months to August 2014 indicate there have been just 16,345 homes sold below $400,000 in Sydney compared to 97,982 home sales in total.

With home values continuing to rise in Sydney and Melbourne we would expect even fewer sales below $400,000 over the coming 12 months.



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Cameron Kusher

About

Cameron Kusher is Corelogic RP Data’s senior research analyst. Cameron has a thorough understanding of the fundamentals such as demographics, trends & economics. Visit www.corelogic.com.au


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