Did you know there are now 32 suburbs around Australia where a $2 million budget will only buy you an ‘entry-level’ premium house?
New data shows that the median property price for these pricey suburbs has surged past the $2 million mark in just 7 months.
And there’s another 15 expected to join the list as our property markets continue their rapid increase and prices surge to new highs.
Of the top 5, 4 of the suburbs with the strongest price rises are located in NSW.
St Ives Chase saw its median house price skyrocket 22.8% between December 2020 and July 2021 to reach $2.32 million.
West Pymble came in second place with a 22.5% increase to a new median house price of $2.196 million.
House prices in Lane Cove North and Drummoyne also both experienced a 22.4% increase each to new medians of $2.225 million and $2.437 million respectively.
And New Farm in Queensland came in fifth place with a huge 21.6% increase in prices, pushing its median house price up to $2 million
NSW’s Mona Vale, Collaroy Plateau, and Bilgola Plateau all also had significant increases (21.5%, 21.4%, and 20.6% respectively) over the same period, pushing median house prices over the $2 million mark.
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Strong house price growth and the coronavirus pandemic have redefined not only the concept of a premium property but has also redefined what homeowners want out of their property.
It seems that in our new “Covid Normal” world, people love the thought that most of the things needed for a good life are within a 20-minute public transport trip, bike ride, or walk from home.
Now, more people than ever are working from home as new variant outbreaks force whole areas, cities, or even states into harsh lockdowns.
This means we are spending more time than ever in our homes – and are using them differently.
At the same time, increased savings (in the case of full-time workers who aren’t able to go out and spend their money) are giving some people more buying power.
We already know Australia has been building the biggest homes in the world, but the coronavirus seems to have accentuated the thirst for bigger homes.
And it means Australians are paying more for the right property in order to get what they want.
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“A $2 million median is a huge milestone for a suburb to reach, but with Sydney, Melbourne and Canberra now having above $1 million median house price, a $2 million house is now considered an entry-level premium home,” Powell told the AFR.
She adds that given a $1 million home is now the norm in some areas, a $2 million price point is no longer the “very high end of the market” like it once was.
For example, Australia’s national median house price has climbed exceptionally close to the million-dollar mark at $955,927 – which is a huge 18.8% increase over the year, or 5.8% over the June quarter, according to Domain’s latest quarterly House Price Report.
Powell said the rise of the $2 million suburbs in the middle ring meant upgraders would now need to look further afield to buy a house.
“You can see the impacts on other suburbs; ultimately it prices buyers out of a certain area, so buyers can opt to purchase a unit, or buy in the next suburbs, which in turn lifts values in these market segments,” she told the AFR.
The ripple effect is most evident in the once-affordable suburbs where house prices are now on the verge of hitting the $2 million mark.
Those markets include Sandringham in Melbourne, Mermaid Beach on the Gold Coast, and Byron Bay on NSW’s north coast.
Closer to the city, Eastwood, Epping, and Beacon Hill in northern Sydney, Bella Vista in the northwest, and Matraville in the eastern suburbs are all poised to hit the $2 million median house price in the next few months.
In short, no.
While the climbing numbers are impressive to watch, the sky-high prices are unsustainable.
“This is a very unusual rate of growth — unusual circumstances create extraordinary outcomes,” Powell said previously.
Of course, the ‘unusual circumstance’ she is referring to is the Covid-19 pandemic which has forced everyone to re-evaluate how they live their lives and what they want from their homes.
And Powell said the shifting market dynamics and surging house prices meant we were seeing the disruption of the “Great Australian Dream” of a quarter acre block as a first home.
“That is unattainable,” she said.
Many instead would have to look at units – perhaps out of necessity rather than choice.
Having said that, property price growth is not going to stop any time soon – it’s just that the rate of growth will slow down.
And if our regulators bring in macroprudential controls, as they hinting they will, this is likely to affect the lower end of our property markets more than high-end properties