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.

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

About Michael Yardney

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

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
- 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
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
- 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
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
- 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