Million dollar property sales holding up during downturn

Stock image.
Stock image.

PERTH’S million-dollar market is holding up during the ongoing downturn according to CoreLogic data.

Analyst Cameron Kusher said although the Perth housing market had seen a substantial decline in values since the middle of 2014, the share of million-dollar house and unit sales had not fallen significantly.

“Over the 2018-19 financial year, 10.0 per cent of all house sales and 4.1 per cent of all unit sales were at least $1 million,” he said.

“The 10.0 per cent of house sales was down from 10.6 per cent a year earlier and the 4.1 per cent of unit sales was up from 3.9 per cent a year earlier.”

While sales are down on the previous 12 months, they are higher than before the downturn, with only 7 per cent of house sales over $1m in 2012 according to reiwa.com data.

Reiwa president Damian Collins said confidence and low supply were underpinning the resilience of the top end of the market.

“Over the last four or five years, for a lot of people it hasn’t been about affordability, it’s been about confidence,” he said.

“We’ve got record low interest rates, house prices are the cheapest in the nation in all the major capital cities, and in some sectors of the economy there’s certainly been that confidence and people have decided now is a good time to move and trade up so they’re taking advantage of that.”

Mr Collins said there was also no real supply in the upper end of the market, which supported demand and prices.

“The bottom end has suffered the most because there was a substantial overbuild in the last run up so, for example in Baldivis and Ellenbrook, there was too much supply and that market has performed badly,” he said.

“Whereas in the established areas at the higher end of the market there’s no real new supply.”

According to reiwa.com data there were 2141 sales over $1m in the 12 months to June 2019.

Nedlands recorded the greatest amount of top-end sales with 97 out of 108 sales over $1m.

The area also recorded the highest amount of million-dollar sales in the 2017-18 financial year with 95.

This Nedlands home is on the market in the mid to high $2 millions.

Duet Property director Michelle Kerr said Nedlands had continued to perform strongly over the course of the year, with the buyer demographic less likely to be worries by economic ups and downs.

“Both buyer numbers and homes for sale have generally been more subdued over the last 12 months, but the demand for good quality homes has remained strong,” she said.

“Conversely this year has seen the highest number of homes withdrawn from sale after an unsuccessful sales process indicating that many sellers are unwilling to sell at current levels and happy to wait it out.”

The next top performers were Cottesloe (86 sales) and City Beach, with 83 out of 84 sales over $1m.

Mt Pleasant recorded the most million-dollar sales south of the river with 63.

Despite the proportion of sales over $1m remaining fairly stable, the number of suburbs with million dollar medians declined from 37 to 27 over the 12 months to June 2019.

Across the country top-end markets recorded greater declines in million-dollar sales than Perth.

For the combined capital cities, 18.4 per cent of all house and 9.8 per cent of all unit sales over the 2018-19 financial year sold for at least $1m.

The share of million-dollar house sales was down from 21.9 per cent a year earlier and below the peak of 22.3 per cent in March 2018.

Unit sales were down from 11.5 per cent a year earlier and were the lowest since October 2016.

Mr Kusher said the fall in million-dollar sales reflected the overall weaker housing market conditions and the fact that higher valued properties had typically recorded the greatest value falls.

The decline in dwelling values in the previously high-performing Sydney and Melbourne markets saw their share of house sales over $1m fall from 34.2 per cent to 30.2 per cent and 29.0 per cent to 23.1 per cent respectively.

Sydney’s $1m unit sales decreased from 18.9 per cent in the 2017-18 financial year to 16.4 per cent – the smallest share since the 12 months to January 2016 – while Melbourne recorded a fall from 7.8 per cent to 6.5 per cent.

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