Housing affordability in Australia, particularly in Sydney and Melbourne, continues to create feverish debate, be it in policy or political circles, or around water coolers across the nation.
These charts from CoreLogic are only likely to amplify it further.
The first shows the number of houses and apartments that sold for at least $2 million in Australia over the past year, going all the way back to 1991, Australia’s last recession.
There’s been a noticeable acceleration in sales of over $2 million since late 2011, something that just happens to coincide when the RBA began its current easing cycle.
“Over the 12 months to June 2016, there were 11,319 houses and units sold nationally for at least $2 million,” said Cameron Kusher, research analyst at CoreLogic.
“Over the previous 12 months, there were 10,668 dwellings sold for at least $2 million, 10 years earlier there were 3,254 sales and 20 years earlier there were just 236 sales.”
As for the small dip seen in recent months, Kusher says this could reflect that some recent transactions may not have been captured in the data as yet, rather than a reduction in sales volumes.
By type of dwelling, CoreLogic says that approximately 9,882 houses, and 1,437 units, sold for at least $2 million over the past year.
And it’s unlikely that you’ll have trouble in guessing where most of these sales occurred – Sydney and Melbourne.
These charts only underline that point, showing the breakdown in sales of $2 million or more in Sydney and Melbourne compared to the rest of Australia’s capitals .
According to Kusher, “this is just another example how the cost of housing in our two largest capital cities is detaching itself from the rest of the country.”
While these are high-end property sales, the surge in houses and apartments selling for over $2 million dollars is reflective of the enormous price growth seen in Australia’s largest cities over the past few years.
According to CoreLogic’s capital city house price index, the median dwelling price in Sydney and Melbourne has jumped 13.3% and 10.2% respectively since the beginning of the year.
Going back further, to January 2009, the median dwelling price in both cities has grown by over 90% and 70% respectively.
Though calls for more land releases, less red tape on developments and tighter restrictions on foreign ownership may appear to be attempts to help with housing affordability, this is merely skirting around what is truly driving prices higher — the tax treatment of housing, population growth and interest rate settings.
There’s no easy solution to this problem, but if a true debate on how to address affordability concerns is to be had, it needs to be centred on these areas.