Neighbourhoods boasting million-dollar median house prices used to be a big deal. A generation ago these pricey suburbs were home to mansions on the water waterfront, or sprawling estates with tennis courts and guesthouses.
Today’s Sydneysiders, however, are less impressed by that million-dollar price tag with literally hundreds of postcodes in the million-dollar median club. But for first the first time in almost a decade, that membership is shrinking.
According to property data firm CoreLogic, 36 suburbs have dropped out of the $1 million median or more bracket for houses and 21 Sydney suburbs no longer have a median price for apartments of $1 million or more.
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The shift was no surprise to experts following the current slow down of the property market.
“We already knew that a lot of the weakness in the Sydney market was across the higher priced segment. And we’ve clearly seen that reflected here,” said Cameron Kusher, research analyst with CoreLogic.
Currently, 366 suburbs in NSW have a median house value of at least $1 million, but one year ago that figure sat at 402. For units, 46 suburbs still have a median of more than $1 million, however in January 2018 there were 67.
Flash back a decade ago and 78 suburbs in the Harbour City had a median of more than the magic million while just two suburbs were home to million dollar median apartments.
“We’ll probably see more of those medians going down this year with values falling quite sharply,” Mr Kusher added.
He said that many suburbs had seen significant growth over recent years which saw them be pushed beyond the million dollar range.
“In some cases, you could probably say they didn’t deserve to be that expensive. So it’s not really a surprise that we’re now seeing them falling out of that million dollar range,” he said.
The phenomenon is not just Sydney specific, with a decline in suburbs across the country that now have a median of $1 million or more. Today there are 649 suburbs on the list, however just 12 months ago that number was 741.
For homeowners being either in, or out, of the million-dollar club might feel like a psychological advantage or disadvantage, but Mr Kusher said median prices need to be put into perspective.
“Ultimately, it’s just a number. It’s nice to say your property is worth a million dollars, I guess.”
Peter Baldwin, chief auctioneer with Richardson & Wrench, said vendors should remember that these median price drops are coming after extreme highs.
“If you’d had a crystal ball in 2012 no-one could have predicted property prices would have jumped by 80 per cent in some areas,” he said.
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“So if values have come down 20 per cent since June 2017, would you have still been happy in 2012 to have known your property growth would have been 60 per cent?”
He said the movement of some suburbs out of the so-called million-dollar club is going to change the make-up of certain Sydney neighbourhoods.
“The kind of price leaps that were made in some of these areas were driven by a lust for properties people wanted to capitalise on; either or knock down and rebuild, or redevelop the land,” he said.
“That brought a new tier into the market which was a very aggressive tier. Now that this has been corralled somewhat it’s very good for communities. There’s a brilliant upside to this because we’re going to see suburbs becoming communities again and houses becoming homes as opposed to ‘do up and flip’ vehicles,” he said.
“These price changes will change the fabric of some of these areas by bringing back aspirational home buyers, not buyers who are looking to exploit the suburb.”
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