Only 671 capital city suburbs with a median house price of less than $1 million remain
The number of capital city suburbs with a median house price of less than $1 million has shrunk to just 671, new data shows.
A data crunch by Domain has revealed that less than half of the 1,735 capital city suburbs in the latest House Price Report have a median house price of less than $1 million.
Experts and agents predict the number of suburbs with a median house price of less than $1 million will continue to fall.
“We’ve got a dwindling pool of cheaper than $1 million suburbs, and that less than half of them are under $1 million really showcases that an affordable house is extremely hard to find in our capital cities,” says Domain chief of research and economics Dr Nicola Powell.
“Finding an area under a million dollars is getting harder and harder over time,” she says.
A contributing factor is the shortage of affordable housing, underpinned by the lack of houses being built, says Ray White Group chief economist Nerida Conisbee.
Skyrocketing construction costs have deterred – and still deter – builders and developers from building affordable homes.
“If you try to build a new home now, it is quite a lot more expensive than even existing homes. So, that suggests that these very high prices structurally will remain the same,” she says.
As house prices continue to rise, the obvious fix is higher density. Still, many communities are apprehensive about approving new builds – especially apartments – to help with the elevated property-price issues, says Conisbee.
“Australians like having spare bedrooms. We like having a lot of space around us. But a shift will have to take place; we just have to get used to living in smaller homes with higher densities because houses are going to continue to grow in price.”
While $1 million median house prices have quickly become commonplace in Australia’s capital cities, buyers are having to adjust their expectations of what $1 million actually buys – particularly as the goalposts for that are continuously moving, Conisbee says.
“What they’re wanting for $1 million is probably what you could buy for $1 million 10 years ago … but [what you can buy with] $1 million is very different now to what it was before,” says Conisbee.
A decade ago, the median house price in Sydney was $850,151; in Melbourne, it was $610,729, and $477,684 in Brisbane. Now it’s $1,654,668 for Sydney (up 94 per cent), $1,024,243 for Melbourne (up 67 per cent) and $994,945 for Brisbane (up 108 per cent).
When adjusting for inflation, $1 million a decade ago is only $1.2 million today (a 26 per cent increase), according to Reserve Bank Australia’s inflation calculator.
“The value that $1 million gets you has changed significantly over the last 10 years. The core of it is this psychological hurdle that an Australian has when you’re talking about $1 million,” Powell says.
“A million dollars is still a lot of money, whether we’re talking today or 10 years ago,” she says.
“Areas that were seen as affordable, like Cabramatta, are edging towards the $1 million dollar mark in our big capital cities. So, the term ‘affordability’ has absolutely changed.
“Those pockets of affordability are hard to find in the right locations, in those family-friendly places where you can buy a detached family home and live the Australian dream with your Hills Hoist in the backyard. In terms of price point, they’re becoming harder and harder to find.”
Of the 671 suburbs in Domain’s database with a price tag of $1 million or less, 105 have a median of $900,000 or more, putting them closer to the seven-figure club.
Jindalee in Brisbane, for example, has a median house price of $992,500, and local agent Jason Yang of NGU Real Estate Head Office believes it is only a matter of time before the suburb hits $1 million.
“A lot of buyers, especially from the inner west, are still good with buying over $1 million. [Houses] still represent a good value for the future in terms of price growth,” he says.
Some of Jindalee’s price growth can be attributed to surrounding suburbs like Westlake cracking $1 million and adding good value to the homes in the region, says Yang.
“Two years ago, Westlake was a market where the median price was somewhere around $950,000. Now it’s over $1.2 million.”
Even suburbs where the median house price is much lower, like Sydney’s Mount Druitt ($754,000), are expected to surpass $1 million eventually.
Mount Druitt and surrounding areas like St Marys are expected to become $1 million suburbs in the near future, says local agent Sina Tafa of Harcourts Your Place.
“Just based on our office sales, I’ve noticed that we have hit over $1 million, even $1.1 million and $1.2 million for your standard four-bedroom homes [in Mount Druitt]. And I think that comes down to supply and demand issues,” she says.
While more suburbs with a median house price of $1 million might be disheartening for many buyers, Conisbee says it’s important to remember that these numbers are a median of the available house prices.
“The median is a middle point. There can be cheaper homes available [in $1 million-club suburbs],” she says.
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