Over the last seven months of 2021, more than 300 Australian suburbs saw media house prices top $1 million, new data from CoreLogic shows.
But as the rate of dwelling value appreciation slows in the markets that exploded last year, experts say other cities, along with regional areas, are yet to hit their peak, driving speculation around the extent to which the housing market will cool in 2022.
Between May and December last year, 311 suburbs hit a median price of $1 million or higher, with the largest number of new entrants in Sydney and regional NSW.
The deluge of new suburbs surpassing $1 million lifted the nationwide suburb total 38.4% to 1,120.
A total of 77 Sydney suburbs joined the ranks, meaning there are now 417 Sydney suburbs with $1 million-plus median prices.
A raft of new entrants also emerged on the Central Coast, as the affordability crunch, along with the ability to work from home, pushed first-home buyers out from capital cities toward regional areas.
The number of million-dollar suburbs more than doubled in regional NSW to 116, driven by new entrants in Newcastle.
Brisbane also recorded a jump in the number of suburbs hitting the million-dollar mark with 40 new entrants, taking its total to 91, while regional Queensland added 36 new suburbs.
In Melbourne, 37 suburbs have joined, lifting the total to 221, while Adelaide added 25 suburbs to 70, and the ACT recorded 18 new additions to a total of 45.
In Perth, 10 new suburbs joined the million-plus list, and boosted the total to 52, while Hobart’s million-dollar suburbs count rose from two suburbs to seven.
Record-breaking price growth widened high-value net
Since the onset of the pandemic — and in a year that saw the Australian property market balloon to $7 trillion in value — a perfect storm of factors including affordability concerns, record low interest rates boosting demand and low levels of stock on the market have pushed buyers out of expensive major inner cities.
The share of million-dollar suburbs has ballooned across the country, rising from just 16.2% of all suburbs nationally in March of 2020, to 29.8% of suburbs as of 2021, the data shows.
Tim Lawless, director of research at CoreLogic, said the eye watering price growth seen in the first nine months of 2021 had driven the expansion of suburbs exceeding a median $1 million price tag.
“Considering housing values nationally have increased by 22.6% since March 2020, it’s no surprise to see the number of suburbs with a median value of at least a million dollars increase so substantially,” Lawless said.
“In cities like Sydney, where the median house value first rose above the $1 million dollar mark in 2016 and is now approaching the $1.4 million mark, a million-dollar purchase price for a house has become the norm,” he said.
But the price rise across regional pockets, along with outer suburbs that historically have not been buoyed by property booms “was quite a new phenomenon”.
For example, before the pandemic Hobart did not have a single suburb with a million-dollar median house value. Now there are seven across metropolitan areas of the city.
More than seven in 10 Sydney suburbs now attract more than a $1 million median house price, compared to one in two before 2020.
“The surge in suburbs with a million-plus, median value is a reminder of the worsening housing affordability pressures and the record level of housing debt in Australia,” Lawless said.
The proportion of suburbs with a median house value of $3 million or more rose to 2.3% last December, from 0.6% in March 2020, with 94% of these suburbs located in Sydney and 6% located in Melbourne.
Forecasts for 2022 house prices
A combination of factors, including the big banks lifting fixed-rate loan interest rates in the latter months of 2021, and suggestions the Reserve Bank of Australia could hike the cash rate as soon as May next year ahead of its late 2023, early 2024 guidance could impact prices this year.
In addition, data in the last weeks of 2021 showed an uptick in property listings across Sydney and Melbourne’s premium markets, easing demand strictures and suggesting the top end of the market was reaching its peak.
Nicola Powell, chief of research and economics at Domain, said the suburbs that had recorded meteoric price increases in the past 12 to 18 months were now among the highest proportion reducing asking prices.
“This is a real indication of where we are in the price cycle because the premium end is now slowing,” she said.