Although largely dormant so far this year, Australia’s prestige market has recorded the strongest capital gains over the past year and that’s led to more suburbs reaching a median price of $1 million plus.
While we still have fewer $1 million suburbs than before the GFC, this exclusive club of Australia’s most desirable localities expanded in the last 12 months to February 2010 by 12 per cent, with 165 suburbs now reaching the $1 million median, up from 147 in 2009. We had 175 in February 2008.
It’s fascinating to break down the statistics on a state and territory level. Take NSW, home to one of our most expensive property markets – Sydney. RP Data says the premier state now has 95 suburbs with a median of $1 million plus, up from 84 in 2009 and almost equal to the pre-GFC level of 96 suburbs in 2008. All but one of these 95 suburbs is in Sydney, with Bar Beach in Newcastle the only regional representative.
However, in Western Australia, it’s a different story. There are $26 million suburbs in 2010, the same as in 2009, but significantly fewer than the 36 recorded in 2008. But when you consider that WA had just one suburb with a median above $1 million in 2006, it has firmly established itself in Australia’s prestige sector. In fact, WA’s Peppermint Grove is now the country’s second most expensive suburb with a median house price of $4,537,500.
Only Victoria has recorded a significantly higher number of million-dollar suburbs in 2010 compared to pre-GFC 2008 – 26 today, up from 22 in 2008, while the ACT has gained one to make three in total. The Northern Territory got its first million-dollar suburb this year, which is not surprising given the incredible boom in Darwin during recent years. Tasmania – one of our most scenically spectacular states, remains below the benchmark with no suburbs above $1 million.
Sydney was once considered the sole property powerhouse of the nation, but this has changed over the past five years as other state markets such as Western Australia have come of age. In 2005, Sydney boasted almost 80 per cent of the country’s $1 million suburbs – today it has 58 per cent.
Not too many surprises in the latest list of Australia’s most expensive suburbs, although Sydney’s cream of the crop now stretches beyond the city’s most affluent precincts – the Eastern Suburbs, North Shore and Northern Beaches. Now making the top 15 is Kangaroo Point, in the St George region, south of Sydney, and Breakfast Point, in the Inner West.
Today, the prestige market remains somewhat untested with most activity under $2 million in 2010. We’ve seen a few outstanding sales above $5 million but supply and activity is generally low. Increasing executive pay and bonuses will create pent-up demand and accompanying price growth soon.
A good test of the country’s ultra prestige market will be the newly listed campaign for Altona, one of the country’s most revered properties, located in Sydney’s Point Piper. The vendors are hoping for $45 million, which would match Sydney’s current record set by the Coolong sale in nearby Vaucluse in 2008. Altona last sold for $28 million in 2002, so if it gets $45 million today, that will represent a 60 per cent capital gain over the past eight years.
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