Australia’s surging property market continues to push prices higher and higher, with the number of homes across the country valued over $1 million skyrocketing in the past 12 months.
And thanks to a new COVID-19-led lifestyle shift, the seven-figure price tags are no longer reserved only for the affluent, inner-city suburbs with some lesser-known areas also jumping on the million-dollar bandwagon, new data from realestate.com.au reveals.
The prices of million-dollar homes in many outer metropolitan and regional suburbs within commuting distance of CBDs were much higher in March 2021 compared to the previous year.
The shift is part of a trend of workers relocating to regional areas en masse in search of a different lifestyle that fits in with the post-COVID-19 era.
It’s well documented that the COVID-19 pandemic restrictions have significantly changed home ownership goals and what Australians want most in their next home.
Our CBD’s have borne the brunt of social distancing requirements, trading restrictions, job losses and large numbers of office-based workers working from home, with most CBD workers and shoppers typically travelling from middle and outer suburbs.
“We’ve seen a big change in what buyers are looking for during COVID. We’ve seen very strong demand for properties in regional and scenic areas, driven by changes in work practices due to COVID-19, which have allowed people to work more remotely,” Flaherty said.
She added most of the suburbs with the biggest jumps in million-dollar property valuations would have started from a lower value base than their inner-city counterparts, giving them “more growing room” and therefore greater increases.
“A lot of these outer, regional areas would have had a higher proportion of properties valued below that one-million-dollar mark [before COVID] than some inner-city suburbs. There’s more growing room for properties to get to and exceed that one-million-dollar mark,” she explained.
Regional and outer metropolitan NSW suburbs hit the millionaire ‘sweet spot’
Regional and outer metropolitan suburbs in NSW dominated the top 10 suburbs with the biggest jumps in million-dollar house and unit valuations nationally, largely because homebuyers can get the best of both worlds in these areas.
“A lot of areas in NSW fit that bill of being regional but still accessible to the Sydney CBD or other regional town centres. NSW is a state that meets that sweet spot where you’ve got that balance between scenic lifestyle suburbs and also commutability,” Flaherty said.
Another reason is property prices in NSW are also generally more expensive than anywhere else in Australia, she explained.
Realestate.com.au data revealed house prices in Australia’s top 10 million-dollar suburbs all grew by more than 60%, with homes in Victoria’s Strathmore Heights, located around 12km north-west of the city’s CBD, having the biggest increase in houses valued at more than a million dollars nationally, jumping from just 2.7% in 2020 to a whopping 85.9% in 2021.
Seven of the top 10 suburbs for houses were located in NSW, with Mount Kuring-Gai, Stanwell Tops, Revesby Heights and Gerringong ranking in the top five.
Houses with a value of a million dollars currently make up more than 90% of these markets compared to between 20-30% a year ago.
Merewether Heights, East Corrimal and Woonona, all also in NSW, all made the top 10 list.
Elsewhere, Bonnet Hill in Tasmania took 10th place with a 60.8% increase in the number of houses now valued over $1 million.
For units, the data showed a similar story, with 8 out of the top 10 suburbs being located in NSW.
Maryville, North Narrabeen and Banksmeadow take the top three spaces for the suburbs where unit values surged, with 48.6%, 48.5% and 47.9% respectively now worth over $1 million.
NSW’s Gymea Bay and Victoria’s Sorrento filled up the top five, all with more than 50% of units valued at a million dollars in 2021.
Top strongest price growth suburbs by state
Looking at the top suburbs by state, as previously mentioned, Mount Kuring-Gui in NSW and Strathmore Heights Victoria took first place in their states.
Maroochy River, in Queensland’s Sunshine Coast region, claimed top spot for that state, with the percentage of houses valued at a million dollars jumping from 13.2% in 2020 to 69.6% in 2021.
Elsewhere, million-dollar home valuations in Gnangara, Western Australia shifted from 18.6% to 62.8% over the 12-month period.
In the ACT, Weetangera properties valued over $1 million went from 17.3% to 72%.
In Brinkin, Northern Territory, the figure jumped from 15.5% to 48.3%.
Linden Park in South Australia saw the number of its millionaire properties move from 22.1% to a whopping 72.8% over the year.
And lastly, Bonnet Hill in Tasmania, which ranked in 10th place in the national list for million-dollar house price growth, saw its proportion of $1 million properties grow from 6.7% to 67.5%.
Has Australia’s property price growth peaked?
The internet and newspapers have been filled with stories of properties selling for amounts wildly above reserve.
Such news can create FOMO and fuel buyer demand.
But buyer overexuberance is rarely sustained for long periods of time.
My feeling is that price growth will level out this year because there are more buyers than sellers, the post-COVID-19 normal has encouraged discretionary vendors, and because remember, property prices have been stagnant for 3 years.
Are realestate.com.au’s Flaherty also thinks prices have peaked and expects a similar outlook.
She pointed out that the COVID-induced regional shift has hastened price growth in many outer-suburban and regional suburbs, and while prices will likely keep going up, the speed at which they grow will slow down.
“COVID has accelerated this trend and I suspect it might start to wear off in the coming weeks and months. Office occupancy rates around the country are starting to creep back up and there are a lot of people who may need to commute to the office more often,” she said.
“The novelty of living in a regional area might wear off for people in the future. What we’re seeing now might be the height of that demand for those regional properties.”
But while many people will need to return to the office, a hybrid approach to work practices will probably see many Australians continue to enjoy regional living, commuting to the office as-and-when they’re needed to, rather than on a daily basis.
“There has been a shift in lifestyle preferences that is going to stick post-COVID just because we have a new way of working. That means more people will want to live further out in more scenic areas,” she said.
“Once a shift in preferences happens that causes a sudden movement in price, but then the market will readjust and maybe that level of growth won’t be the same as what we saw in the past.”
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