Australia’s $3 million suburb club has doubled again in 2021 thanks to the housing market boom, as the luxury property market powers ahead during the pandemic.
The hot pace of property price growth this year has led to more suburbs cracking the $3 million median house price, realestate.com.au senior economist Eleanor Creagh said.
“The luxury market has continued to power full steam ahead in 2021,” Ms Creagh said.
“The luxury market had a very strong year last year in 2020 and managed to shake off the recession, and this year has managed to shake off the Delta variant as well.”
Australia’s luxury property market has powered ahead during the pandemic. Picture: realestate.com.au/buy
The number of suburbs with median house sale prices over $3 million doubled during 2020, with the luxury residential market experiencing particularly strong conditions as people saved more and total household wealth grew.
The $3 million-plus club has doubled again this year amid boom conditions in the overall housing market and the luxury sector.
Sydney suburbs account for all but a few of the 70 suburbs where the median house price is at or above $3 million.
Property prices have surged during the pandemic as record-low interest rates drive huge buyer demand, and people prioritise lifestyle and put money that would have been spent on overseas holidays towards their homes.https://imasdk.googleapis.com/js/core/bridge3.484.0_en.html#goog_179659203Play Video
How COVID has affected property prices01:58
“Record-low mortgage rates and closed international borders have certainly seen demand skyrocket in the property market, and particularly when you look at the luxury market where supply is challenged, that’s all contributed to exceptional price growth,” Ms Creagh said.
Ms Creagh said household wealth had also risen rapidly as housing prices and the value of other assets increased, benefiting high income earners in particular.
Wealthy Australians, higher income earners and returning expats had been reassessing their lifestyles like everyone else during the pandemic and lockdowns, she added.
“We’ve seen that in the luxury market as well in terms of people saving more money and being able to put those dollars towards lifestyle upgrades and even holiday homes in some cases.”
Sydney suburbs dominate the $3m club
The $3 million-plus club is headed by Australia’s most expensive suburb of Point Piper. Point Piper’s median house sale price has hit $15 million, according to realestate.com.au data based on sales over the 12 months to August.
Other top members among Sydney’s most expensive suburbs included Tamarama ($10.22 million median), Bellevue Hill ($6.4 million), Double Bay ($6.05 million) and Vaucluse ($5.95 million).
Not surprisingly, the $3 million-plus club is headed by Sydney’s most expensive suburbs, including Bellevue Hill. Picture: realestate.com.au/buy
Real estate at the top end of the luxury market is typically tightly held, with Ms Creagh saying the lack of supply has contributed to the strong price growth.
“We’ve seen this large uptick in demand and we have not seen an uptick in supply to match that heightened demand,” she said.
Ms Creagh said Sydney’s domination of the $3 million club reflected the fact it was the capital city with the highest median prices.https://flo.uri.sh/visualisation/7335584/embed?auto=1
Suburbs had to have had at least 10 sales over the 12 months to August to be included in the list.
New entrants made up about half of the 70 suburbs now sitting above a $3 million median, while other top-end suburbs like Point Piper had sufficient sales in the past 12 months to also be included in the 2021 list.
The prestigious suburb of Toorak has the highest median house price in Melbourne at $5.35 million.
The prestigious Melbourne suburb of Toorak is an existing member of the $3 million-plus club. Picture: realestate.com.au/buy
More coastal and lifestyle suburbs join $3m club
While the rapid increase in prices this year is the main reason so many suburbs have joined the $3 million club, buyers have also been looking for larger homes and a sea change during the pandemic and the latest lockdowns.
Coastal suburbs like Bondi Beach ($3.55 million median house sale price), Curl Curl ($3.3 million) and Coogee ($3.18 million) joined the club.
Many of the new entrants were also in Sydney’s north.
Ms Creagh said Sydney’s eastern suburbs historically had higher median prices, but the exceptional price growth recently had pushed more northern suburbs into the $3 million-plus category.https://flo.uri.sh/visualisation/7335631/embed?auto=1
Ms Creagh said the coastal appeal of suburbs on the Northern Beaches such as Narrabeen ($3.48 million median) and Seaforth ($3.32 million) was also a factor.
“They’re coastal, they’re lifestyle destinations. They’re the sort of place that upgraders would be looking at in terms of looking for lifestyle additions,” she said.
The appeal of waterfront living in suburbs like Seaforth has grown during COVID. Picture: realestate.com.au/buy
Laing+Simmons Narrabeen director Chris Gamarra said the demand for coastal living during COVID had driven prices up in Narrabeen but was also leading to many of the suburb’s younger families selling apartments to move to Queensland.
“There are a lot of locals leaving, a lot of young families leaving and going north chasing the Queensland lifestyle with the Sydney money that they get to retain due to COVID,” he said.
Mr Gamarra said they were being replaced by people from the eastern suburbs or inner west who wanted the coastal lifestyle and Narrabeen’s surfing beach, now that they no longer had to commute to a city office every day.
He said Narrabeen was also attracting a lot of buyers from the Hills district in Greater Western Sydney, who now had a lot of equity in their homes and were buying secondary properties on the coast.
In Narrabeen where the median house price is now almost $3.5 million, there is strong demand for upmarket beachside apartments. Picture: realestate.com.au/buy
Given its large number of apartments, Mr Gamarra said beachside apartments offering a “straight-to-the-beach” lifestyle were in high demand.
“What’s in demand are upmarket beachside apartments that offer that walk-out-on-to-the-sand lifestyle where people can go for a surf, run back and have a Zoom meeting.”
Mr Gamarra said many locals had also been priced out of the suburb, which he said had experienced about 42% capital growth in dwelling prices over the past year.
“That median house price of about $3.5 million is not really attainable for a lot of the local people here,” Mr Gamarra said.
“The top-tier high income earners are the only people who can still upgrade a family home in this area.”
The only non-Sydney suburbs to enter the $3 million club were in Melbourne. Joining Toorak were East Melbourne with a $3.8 million median house sale price, along with Brighton ($3.11 million) and Canterbury ($3.07 million).
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Ms Creagh said the COVID-driven desire for coastal living and holiday homes plus the continued growth in property prices were likely to see more suburbs cracking the $3 million median.
Ms Creagh said Portsea on Melbourne’s Mornington Peninsula was one of the strongest contenders, given its $2.9 million median house price and the suburb being in the top 10 nationally for views per listing over the past six months.
“That would talk to the fact that people are looking for wellbeing, for lifestyle, for the coast, looking for those things that make lockdown a little easier,” she said.
The seaside town of Portsea is close to hitting a $3 million median house price. Picture: realestate.com.au/buy
The lifestyle and coastal appeal also made Byron Bay another contender for the $3 million club.
Byron Bay, home to A-listers like Chris Hemsworth and wife Elsa Pataky, has been the fastest growing regional market in Australia. Its median house sale price hit $2.8 million, according to the August data.
“Byron is well on its way,” Ms Creagh said.
“Certainly Byron has witnessed some astonishing price growth since the pandemic began. It’s always been a popular spot but we’ve seen that those scenic coastlines have been in high demand throughout this COVID period.”
Ms Creagh noted, however, that Byron Bay had experienced a 26% decline in views per listing over the past six months.
“It will be an interesting one to watch in terms of cracking the $3m median – the drop off in views per listing is pointing to maybe the buzz subsiding.”
Based on strong growth in prices and views per listing over the past six months, Ms Creagh said other contenders to join the $3 million club included the affluent Perth suburb of Dalkeith given its $2.9 million median price.
Already viewed as a luxury suburb, Dalkeith is close to having a $3 million median house price. Picture: realestate.com.au/buy
Another possibility was Burradoo in the NSW Southern Highlands, which currently had a $2.4 million median but had experienced strong growth in demand.
In Brisbane, Ms Creagh said suburbs like New Farm could possibly reach a $3 million median, although she noted that there was still some way to go from $2.1 million currently.
While the $3 million median has been used to classify luxury suburbs in the east coast capitals, Ms Creagh noted there were a number of locations in the other capitals that would be already regarded as luxury suburbs.
Surge in sales of $3m properties
While property sales at or in excess of $1 million have jumped this year, sales of properties at or above $3 million have recorded even bigger gains.
Although sales of properties at or above $3 million only accounted for 2% of all preliminary sales so far this year, realestate.com.au data showed $3 million-plus sales in August were 126% greater than they were at the same time in 2020.https://flo.uri.sh/visualisation/7335539/embed?auto=1
Sales of $3 million properties had more than doubled so far this year in NSW, Victoria, Queensland and Western Australia.
Ms Creagh said that was a reflection of the surge in prices, which meant more properties were now worth $3 million.
“It also reflects the uptick in demand that we’ve seen in terms of people looking for larger homes and looking for lifestyle upgrades,” she said.
According to realestate.com.au data, property prices nationally increased by 20.8% over the 12 months to August.