A budget of $400,000 for a property purchase in one of Australia’s capital cities used to provide an array of options. However, due to rising dwelling values, there’s been a significant reduction in the proportion of sales occurring in this price bracket, according to CoreLogic.
The firm’s latest Property Pulse report indicates that just 31.2% of houses and 37.3% of units sold in Australia this year transacted for less than $400,000. By comparison, a year ago the proportions were recorded at 32.8% for houses and 38.6% for units. Winding further back, 62.4% of all house sales and 68.9% of all unit sales were priced below the $400,000 bracket a decade ago.
Nearly 17% of all house sales and 28.4% of all unit sales over the 12 months to June 2017 were below $400,000.
“Even comparing these figures to just a year earlier the decline in the proportion of sales under $400,000 is extremely noticeable for houses (19.0%) and somewhat less so for units (29.6%),” said Cameron Kusher, head of research at CoreLogic. “A decade ago, more than half of all capital city house (53.1%) and unit (66.3%) [sales] were less than $400,000.”
Outside the capitals, 52% of houses and 60.5% of units sold over the 12 months to June 2017 were priced below $400,000. A year prior, the proportions were recorded at 54.3% for houses and 63.2% for units. In contrast, a decade ago, more than three-quarters of regional house sales (75.6%) and unit sales (75.2%) sales were less than $400,000.
CoreLogic’s research shows a similar decline in the proportion of units selling under $400,000. Ten years ago, only Sydney (53.9%) and Perth (60.4%) had fewer than 70% of units selling for less than $400,000. Over the past 12 months, only Adelaide (59.2%) and Hobart (78.3%) had greater than half of all unit sales below $400,000.
“As dwelling values continue to increase, we anticipate that over the next 12 months the proportion of properties selling for less than $400,000 will further reduce and in the way that the rising number of sales of properties for at least $1 million shows the deteriorating affordability, so too does the significant reduction in the availability of properties priced under $400,000,” Kusher said.
“Although the federal government attempted to address housing affordability in the budget this year, in order to improve housing affordability, clearly there is much more work to be done on both supply and demand drivers of the market.”
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