Pricey suburbs have been hit hard by a slowdown in housing demand.
New figures from RP Data has indicated that the number of suburbs in Australia with median house of unit prices of $1m or more fell 13.8% in 2011 as weak demand plagued the premium market. While the number of suburbs on the $1m-plus was up from 2009, 31 suburbs dropped off the list from 2010 to 2011.
Despite the decline, RP Data analyst Cameron Kusher said the number of million-plus suburbs had trended upward over the past decade.
"In fact, the 2008 and 2011 calendar years are the only two years where the number of suburbs fell in comparison to the previous calendar year. These were also the only two calendar years over the past decade when capital city home values recorded an annual decline," he said.
Kusher said the fall in premium suburbs echoed broad market trends. The RP Data-Rismark Stratified Hedonic Index recorded a 4.8% decline for the most expensive 20% of capital city suburbs in 2011, while the most affordable 20% saw only a 1.6% decline. The remaining 60%, priced in the broad middle, fell 2.9%.
Prestige suburbs are not tipped to improve over 2012, either. Kusher said RP Data did not expect any substantial change in the number of suburbs above the $1m median price-range mark.
"We anticipate that this sector of the market will continue to be weighed down by the poor performance of the equities market, the unstable global economic situation and lower levels of demand for debt by consumers that continue to act cautiously and show a preference for saving and paying down debt rather than spending, In particular, luxury items such as home which cost a million dollars or more appear to have lower levels of demand as consumers show a more conservative approach to spending their money," Kusher said.