There was a time in which having a dwelling worth $1 million or more meant that the property was exclusive and rare. Today dwellings with a $1 million valuation are becoming much more common. At the end of 2016, there were 760 suburbs nationally that had a median value of at least $1 million. This figure has increased from just 275 suburbs nationally five years earlier. Units have been the big mover with the number of $1 million suburbs increasing by 479% over the five years compared to a 160% increase for houses.
87% of the suburbs nationally that had a median value of at least $1 million were located in either New South Wales (70.3%) or Victoria (16.7%) up from 75.6% in New South Wales (60.4%) and Victoria (15.3%) five years earlier.
The combined capital cities accounted for 93.5% of all the $1 million suburbs in 2011 and this increased marginally to 93.6% in 2016. This is representative of the higher cost of housing in capital city markets. It also highlights the relatively weaker value growth performance of regional housing markets throughout recent years.
Escalating dwelling values in Sydney, and to a lesser degree Melbourne, have resulted in an increasing proportion of the suburbs with a median value of at least $1 million over the past five years. At the end of 2011, 57.8% of the suburbs nationally with a median value of at least $1 million were in Sydney, by the end of 2016 the proportion had risen to 65.4% of suburbs nationally. The proportion of $1 million suburbs in Melbourne has increased to 16.4% of suburbs nationally at the end of 2016 from 15.3% at the end of 2011.
Further highlighting the rapid increase in values over recent years is the data for suburbs with a median value of at least $2 million. At the end of 2011, 39 suburbs nationally had a median value of at least $2 million. By the end of 2016, this figure had risen to 136 suburbs nationally, an increase of 249% over five years. At the end of 2011, 30 of the 39 suburbs were located in Sydney and by the end of 2016, 115 of the 136 suburbs were located in Sydney.
While rising housing values increase the asset wealth of owners, it is also reflective of the fact that for those who don’t yet own a home it is becoming increasingly difficult to save a large enough deposit in order to purchase a home. This is particularly the case in Sydney and Melbourne where over the past five years, dwelling values have increased by a total of 68.1% and 43.3% respectively. Meanwhile, wages are increasing at their slowest pace on record and housing affordability is once again a central them in the political debate. The rise in suburbs with a median value of at least $1 million over recent years is reflective of the growing chasm between those that own homes and those who don’t.
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