Now that the current property cycle is well underway (the market having bottomed almost 20 months ago) the prestige end of the market is performing strongly helping the rich become…well…richer.
As you can see form the graph below the premium sector of the housing market has gathered pace over the past six months and is now showing the highest capital gains compared with the broad middle segment and most affordable segments of the housing market.
Source: RPData.com
Dwelling values across the most expensive quarter of the capital city markets were up 6.7 per cent over the past six months (compared with 5.8 per cent growth across the broad mid-market and 4.7 per cent growth at the most affordable quarter of the market).
Similarly, premium dwelling values have risen by 10.1 per cent over the past twelve months compared with a 9.5 per cent and 7.5 per cent capital gain across the mid-market and most affordable quarter of the market respectively.
There are more million dollar suburbs
The RP Data figures for January 2014 showed that 272 suburbs now have a median price of $1 million or more compared up form 188 suburbs at the the same time last year.
Of the million dollar suburbs with a median price of at least $1 million, the vast majority (56%) were in the Sydney property market and 20% of suburbs were located in Melbourne. These were followed by Western Australia (12%), Queensland (6%), South Australia (3%), Australian Capital Territory (2%) and Northern Territory (0.5%).
Here is the Rich List
| State | Suburb | Property type | Median Price Jan 2014 | Median price Jan 2013 | Capital growth $ | 12 month Growth | Gross Rental Yield |
| WA | PEPPERMINT GROVE | H | 3575000 | 2400000 | 1,175,000 | 40% | 2% |
| NSW | TAMARAMA | H | 2931000 | 2093571 | 837,428 | 40% | 3% |
| NSW | NORTHBRIDGE | H | 2205000 | 1670000 | 535,000 | 33% | 3% |
| NSW | PALM BEACH | H | 2179500 | 1662500 | 517,000 | 31% | 2% |
| NSW | GLENORIE | H | 1067500 | 599500 | 468,000 | 43% | 3% |
| NSW | BIRCHGROVE | H | 1625000 | 1170000 | 455,000 | 38% | 3% |
| NSW | ZETLAND | H | 1200000 | 755000 | 445,000 | 48% | 3% |
| NSW | ROSE BAY | H | 2235000 | 1815000 | 420,000 | 29% | 3% |
| NSW | WAITARA | H | 1121000 | 750000 | 371,000 | 49% | 3% |
| NSW | LONGUEVILLE | H | 2490000 | 2120000 | 370,000 | 17% | 3% |
| NSW | SANDRINGHAM | H | 1490000 | 1121000 | 369,000 | 35% | 3% |
| NSW | KANGAROO POINT | H | 2455000 | 2100000 | 355,000 | 20% | n.a |
| NSW | BELLEVUE HILL | H | 3275000 | 2950000 | 325,000 | 11% | 3% |
| NSW | MILSONS POINT | U | 1140000 | 832500 | 307,500 | 34% | 3% |
| NSW | ROSEBERY | H | 1100000 | 832500 | 267,500 | 32% | 4% |
| NSW | BALMAIN | H | 1287000 | 1035000 | 252,000 | 23% | 3% |
| QLD | ASCOT | H | 1110000 | 868000 | 242,000 | 23% | 3% |
| VIC | PRINCES HILL | H | 1190000 | 950000 | 240,000 | 27% | 2% |
| NSW | WAHROONGA | H | 1200000 | 960000 | 240,000 | 23% | 3% |
| NSW | GLADESVILLE | H | 1200000 | 970000 | 230,000 | 22% | 3% |
| NSW | EPPING | H | 1167500 | 941500 | 226,000 | 24% | 3% |
| NSW | DENISTONE EAST | H | 1080000 | 860000 | 220,000 | 24% | 3% |
| NSW | MOSMAN | H | 2300000 | 2100000 | 200,000 | 12% | 3% |
| NSW | MARSFIELD | H | 1050500 | 855000 | 195,500 | 23% | 3% |
| NSW | DULWICH HILL | H | 1041000 | 851500 | 189,500 | 22% | 3% |
| SA | LEABROOK | H | 1075000 | 888000 | 187,000 | 44% | 3% |
| VIC | SOUTH YARRA | H | 1140000 | 1035000 | 105,000 | 28% | 3% |
Source: RP Data
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'The Rich Are Getting Richer As High End Properties Boom' have 6 comments
March 31, 2014 @ 12:34 am Ivan Vasev
Hi Michael,
What is your advise for investing in apartment/s in Port Headland, WA. Advertised return looks great as the capital growth?
Regards
Ivan
March 31, 2014 @ 7:04 am Michael Yardney
Ivan
If you’ve been reading my blogs you’d know I think that a bad investment decision, especially at this stage of the property cycle.
Strategic investors also own the type of property that will be in continuous strong demand by a wide demographic of owner-occupiers in the 4 big capital cities of Australia, because these locations are underpinned by multiple pillars of economic support and therefore values don’t fluctuate widely when times become tough.
March 27, 2014 @ 2:01 pm Lin
Hi,
I am going to miss your one day session in Brisbane and have read your comments ie David Koch and investing in the Sunshine Coast. My question is would buying in Brisbane suburbs return better than the Sunshine Coast in the overall investment on rental return and capital gain.
I look forward to your comments.
Linda
March 27, 2014 @ 2:59 pm Michael Yardney
Lin
It’s a pity you can’t make it on the weekend- we’ve got over 200 Brisbane property investors coming.
If you’ve been following my blogs you’d know I DO NOT recommend investing in holiday locations like the Sunshine Coast or the Gold Coast, even though their markets are slowly turning.
Stick with the 4 big capital cities of Australia, but then please be very, very selective – only 5% of Brisbane properties are “investment grade.
March 27, 2014 @ 9:30 am Dan
Hi,
Is there any measure of the ratio between natural capital growth and manufactured capital growth that affects these figures?
March 27, 2014 @ 9:55 am Michael Yardney
Good question Dan
While I don’t really know, I’d suspect most of these high end investors don’t just buy property and wait for it to increase in value – I assume they “manufacture” capital growth through renovations and property development