Research by analyst Cameron Kusher shows that the cost of housing has continued to rise in most parts of the country over the past 12 months.
He said, “Bracket creep should come as no surprise in markets like Sydney and Melbourne, where dwelling values have increased by 77 per cent and 61 per cent respectively over the past five years.
“While Sydney and Melbourne dominated as the two capitals with the highest proportion of sales at at least $1 million, most other capital cities and regional areas also enjoyed a proportional lift in home sales over the million-dollar mark.”
The CoreLogic analysis confirmed that, over the 12 months to June 2017, 15.4 per cent of all house sales and 8.8 per cent of all unit sales nationally were at a price of at least $1 million. By comparison, 12 months earlier 14.4 per cent of all house sales and 7.5 per cent of all unit sales were at least $1 million in value.
The latest data shows that instances of dwellings selling for at least $1 million are much more prevalent across the combined capital cities. Over the 12 months to June 2017, 23.2 per cent of all houses and 10.8 per cent of all units sold in capital cities went for at least $1 million.
The proportion of sales of at least $1 million has increased over the year from 21.5 per cent of houses and 9.1 per cent of units. While regional housing markets generally have lower housing costs than capital cities, the proportion of sales of at least $1 million is also increasing in these areas.
Across the combined regional areas the proportion of houses selling for at least $1 million has increased, from 3.5 per cent in June 2016 to 4.1 per cent in June 2017. Meanwhile, the proportion of units selling for at least $1 million has increased to 3.5 per cent of all sales in June 2017, up from 3.2 per cent a year earlier.
Delving into the individual capital cities, not surprisingly Sydney and Melbourne have had substantially more properties sell for at least $1 million over the past year than any other capital city.
Over the past year, 47.8 per cent of all houses and 21.3 per cent of all units sold in Sydney transacted for at least $1 million. By comparison, 10 years earlier just 13.8 per cent of houses and 4.7 per cent of units transacted for that figure over the year. In Melbourne, more than a quarter (25.9 per cent) of house sales and 7.4 per cent of unit sales were at least $1 million in value, in comparison with ten years earlier when 5.8 per cent of house sales and 2.7 per cent of unit sales over the year were at least $1 million.
In all of the other capital cities, the proportion of houses selling for at least $1 million is higher than it was a decade ago. More than 10 per cent of house sales over the past year in Perth and Canberra were at least $1 million in value. However, Perth is the only city to have recorded a lower proportion of unit sales of at least $1 million over the 12 months to June 2017 compared to a decade earlier.
Mr Kusher said, “With dwelling values continuing to climb, we anticipate that in another 12 months we’ll see an even higher proportion of sales sitting at or above $1 million.
“The flip-side to this is that the ongoing increase in the proportion of residential properties selling in excess of $1 million highlights the ongoing deterioration in the availability of housing affordability.
“Although the Federal Government attempted to address housing affordability in the Budget this year, it is clear that in order to improve housing affordability there is much more work to be done on both supply and demand drivers of the market.”
This Week’s Auction Preview
This week, across the combined capital cities auction activity is expected to remain relatively sedate, with the number of auctions scheduled increasing by only 0.5 per cent when compared to last week’s final figures (1,857). There are 1,867 capital city auctions currently being tracked by CoreLogic, with volumes set to be higher than those seen one year ago (1,471).
Over the past six weeks, auction volumes have been consistently tracking higher than over the same weeks during the July- August period last year.
Across the two largest auction markets, Melbourne is likely to see a fall in auction activity week on week with 880 homes scheduled to go to auction this week, down from the 911 auctions held last week. Sydney’s volumes are expected to increase by 19.0 per cent over the week with 738 auctions to be held across the city, rising from last week’s 620 auctions. Activity across the remaining capital cities this week will be varied, with Adelaide scheduled to see a higher volume of auctions while in Tasmania volumes will remain unchanged, and Brisbane, Canberra, and Perth will host fewer auctions.
This week, Reservoir is the busiest suburb for auctions with 17 homes scheduled to go under the hammer, followed by Kew and Pascoe Vale with 13 auctions each and Craigieburn set to host 12 auctions; all of the busiest suburbs for auctions this week are in Victoria.
Summary of last week’s auction results
The final auction clearance rate fell last week across the combined capital cities, with 68.2 per cent of the 1,857 auctions successful, down from the week prior when a 68.7 per cent clearance rate was recorded across a slightly higher volume of auctions (1,987).
Since the beginning of June, clearance rates have been below 70 per cent but have consistently remained within the high 60 per cent range, while auction volumes have been relatively consistent since the beginning of July.
Looking at the same period last year, the clearance rate was a higher 72.5 per cent, while volumes were considerably lower (1,540). Across Sydney, the final auction clearance rate increased last week to 66.4 per cent, after the week prior saw the final clearance rate drop to its lowest level this year (65.4 per cent). In Melbourne, the final clearance rate fell last week, recording a 73.9 per cent rate of clearance from 75.6 per cent the previous week. However, clearance rates for the city continue to maintain strength relative to Sydney.
Auction volumes were lower across both markets last week, with 911 auctions held in Melbourne, down from 956 the week prior, while Sydney hosted 620 auctions last week, decreasing from 714 over the previous week. Across the smaller capital cities, Perth and Tasmania’s clearance rate improved last week, while Adelaide, Brisbane, and Canberra saw a fall in clearance rates.
Geelong recorded the highest clearance rate of all the non-capital city regions last week, with 73.3 per cent of the 32 auctions clearing. The Gold Coast recorded the highest volume of auctions last week (36), but the clearance rate for the region was the lowest at 39.3 per cent.