Demand for premium property softens

Demand for premium property softens

Posted on Monday, March 19 2012 at 3:13 PM

The number of Australian suburbs with $1 million median price tags declined by 13.8 per cent for the 2011 calendar year following the 2010 peak, according to RP Data.

A total of 194 suburbs claimed the $1 million median price tag in 2011, a fall of 31 suburbs from the 2010 count, said RP Data.

The fall in premium numbers was likely due to the broader market conditions and slower sales activity due to weaker demand in 2011, because to be eligible for the rich list suburbs needed to record a minimum of 10 sales over the 12-month period, said RP Data research analyst Cameron Kusher.

He said over the past 10 years suburbs recording a median house or unit price over the $1 million mark had risen from 43 to 225 suburbs in 2010.

Kusher said over the 10-year period Tasmania was the only state not to feature a $1 million suburb.

In 2002, the only states and territories featuring suburbs with median prices over the $1 million mark were New South Wales, Victoria, Western Australia and the Australian Capital Territory.

The only states and territories excluded from the 2011 rich list were Tasmania and the Northern Territory.

Only 59.5 per cent of all rich list suburbs were from NSW, highlighting that the state had seen its strong growth in the high-end market over previous years, said Kusher.

He said the 2008 and 2011 calendar years were the only two years where the volume of rich list suburbs fell year on year and consequently when capital city home values recorded an annual decline.

Compared to the top 20 per cent most affordable capital city suburbs, where a 1.6 per cent fall had been recorded, and across the broad middle 60 per cent of suburbs where a 2.4 per cent decline has been witnessed, the most expensive 20 per cent of capital city suburbs recorded a value decline of 4.8 per cent.

Kusher said he had little expectation of a premium market recovery for 2012, as the poor performance of the equities market, the unstable global economic situation and lower levels of demand for debt by consumers – particularly to buy luxury items such as premium homes – will continue to weigh the sector down.

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