The ongoing increases in dwelling values over recent years has led to a significant reduction in the proportion of sales occurring below $400,000.

In last week’s Property Pulse we looked at the proportion of dwellings selling for at least $1 million and showed how it has increased significantly over recent years.  This week we look at the other end of the spectrum how the lift in values has led to a significant drop in the proportion of dwellings selling below $400,000.

Across the nation, 31.2% of houses and 37.3% of units sold 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.  A decade ago, 62.4% of all house sales and 68.9% of unit sales were priced below $400,000.

Annual % of sales below $400,000, National

There are far fewer properties selling below $400,000 in capital cities than there are in regional areas of the country. 

16.8% 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%).  A decade ago, more than half of all capital city house (53.1%) and unit (66.3%) were less than $400,000.

Annual % of sales below $40,000,
Combined capital cities

Outside of the capital cities, 52.0% of houses and 60.5% of units sold over the 12 months to June 2017 were priced below $400,000.  A year earlier the proportions were recorded at 54.3% for houses and 63.2% for units.  If we go back 10 years more than three quarters of regions house (75.6%) and unit (75.2%) sales were less than $400,000. 

Annual % of sales below $400,000
Combined regional areas

Over the past year, less than 3.5% of all house sales in Sydney and Canberra were below $400,000 compared to 35.5% and 40.0% respectively a decade ago.  In a market like Sydney, the unit market doesn’t even represent much of an alternative with 7.4% of all unit sales over the past year below $400,000 compared to 53.9% a decade ago.

Annual % of sales below $400,000
Individual capital cities

Looking specifically at houses, a decade ago only Sydney (35.5%) and Canberra (40.0%) had fewer than 50% of sales below $400,000.  Comparing that to the last 12 months, Hobart was the only capital city to have more than 50% (53.2%) of house sales below $400,000.

There has been a similar but not quite as dramatic decline in the proportion of units selling under $400,000.  A decade 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.

With dwelling values continuing to climb it is anticipated that over the next 12 months the proportion of properties selling for less than $400,000 will further reduce.  As 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.  As stated last week, the Federal Government attempted to address housing affordability in the Budget this year, it is clear that in order to improve housing affordability there is much more work to be done on both supply and demand drivers of the market.  A greater supply of stock which could potentially reduce prices would at the very least be a good start however, the supply needs to be supported by sufficient infrastructure and employment opportunities.

Cameron Kusher
Senior Research Analyst, CoreLogic