With the national housing market having experienced more than four years of ongoing value rises, affordability in certain areas is deteriorating and sales that were once considered to be at the top end of the market are now becoming more common. With housing becoming more expensive, there has been a substantial rise in the number of homes selling for, or in excess of, $2 million.
When the current growth phase commenced in June 2012, there had been 4,103 dwelling sales of at least $2 million with these sales spread across 884 suburbs (if they have achieved this for houses and units they have been counted twice). Over the 12 months to March 2016, there had been 11,648 house and unit sales at a price of at least $2 million with these sales recorded across 1,437 suburbs.
Looking at the number of sales of at least $2 million, the 11,668 sales were comprised of 10,184 houses and 1,464 units. Note that the recent dip in sales is likely to be due to the preliminary nature of recent sales data. Before the financial crisis, the number of sales at or above $2 million peaked at 6,146 sales over the 12 months to February 2008. They then fell to a low of 3,321 sales in June 2009. It took until November 2013 for the number of sales of at least $2 million to eclipse their pre-financial crisis level indicating that the premium housing segment was hit particularly hard during the downturn.
While the previous analysis looked at the number of sales of at least $2 million, the second chart looks at the number of suburbs that had at least one sale over the year at or above this price point. Over the past year, 1,139 suburbs had a house sale at or above $2 million and 298 suburbs had a unit sale at that price point. If we compare this to the pre-financial crisis peak there were 1,193 suburbs that had a sale within this price point before the financial crisis with this figure falling as low as 815 suburbs over the year to June 2009. It took until August 2014 for the number of suburbs with a sale at or above $2 million to eclipse the pre-financial crisis level. With 1,437 suburbs nationally having at least one sale of at least $2 million over the past year it further highlights that housing is becoming less affordable in more suburbs.
It is particularly evident of the deteriorating affordability of housing when you look at the number of suburbs with a sale price at or in excess of $2 million over time in NSW and Vic. As the above chart shows, particularly in NSW and to a lesser extent in Vic, there has been a significant increase in the number of suburbs with sales of at least $2 million over recent years. This is reflective of housing prices being pushed higher, particularly in Sydney and Melbourne, as home values rise and competition for well-located housing increases.
As home values continue to rise, there will continue to be some bracket creep, with the number of homes selling at $2 million or higher likely to rise further. We would anticipate an increasing number of sales at or above $2 million over the coming years, particularly in Sydney and Melbourne. Of course the rising prevalence of sales at this price point is systemic of the deteriorating housing affordability and increasing cost of purchasing a home.