The Rich Are Getting Richer As High End Properties Boom

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.

Prestige SuburbsSource: 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

StateSuburbProperty typeMedian Price Jan 2014Median price Jan 2013Capital growth $12 month GrowthGross Rental Yield
WAPEPPERMINT GROVEH357500024000001,175,00040%2%
NSWTAMARAMAH29310002093571837,42840%3%
NSWNORTHBRIDGEH22050001670000535,00033%3%
NSWPALM BEACHH21795001662500517,00031%2%
NSWGLENORIEH1067500599500468,00043%3%
NSWBIRCHGROVEH16250001170000455,00038%3%
NSWZETLANDH1200000755000445,00048%3%
NSWROSE BAYH22350001815000420,00029%3%
NSWWAITARAH1121000750000371,00049%3%
NSWLONGUEVILLEH24900002120000370,00017%3%
NSWSANDRINGHAMH14900001121000369,00035%3%
NSWKANGAROO POINTH24550002100000355,00020%n.a
NSWBELLEVUE HILLH32750002950000325,00011%3%
NSWMILSONS POINTU1140000832500307,50034%3%
NSWROSEBERYH1100000832500267,50032%4%
NSWBALMAINH12870001035000252,00023%3%
QLDASCOTH1110000868000242,00023%3%
VICPRINCES HILLH1190000950000240,00027%2%
NSWWAHROONGAH1200000960000240,00023%3%
NSWGLADESVILLEH1200000970000230,00022%3%
NSWEPPINGH1167500941500226,00024%3%
NSWDENISTONE EASTH1080000860000220,00024%3%
NSWMOSMANH23000002100000200,00012%3%
NSWMARSFIELDH1050500855000195,50023%3%
NSWDULWICH HILLH1041000851500189,50022%3%
SALEABROOKH1075000888000187,00044%3%
VICSOUTH YARRAH11400001035000105,00028%3%

Source: RP Data

 

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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


'The Rich Are Getting Richer As High End Properties Boom' have 6 comments

    Avatar

    March 31, 2014 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

    Reply

      Michael Yardney

      March 31, 2014 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.

      Reply

    Avatar

    March 27, 2014 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

    Reply

      Michael Yardney

      March 27, 2014 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.

      Reply

    Avatar

    March 27, 2014 Dan

    Hi,

    Is there any measure of the ratio between natural capital growth and manufactured capital growth that affects these figures?

    Reply

      Michael Yardney

      March 27, 2014 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

      Reply


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