Australian suburbs that are no longer part of the $1million club following 12 interest rate rises

Aggressive rate hikes by the Reserve Bank have caused home and unit prices to fall below $1 million in more than 250 suburbs.

Although property values ​​are now recovering, they are still significantly weaker than a year ago, with double-digit declines in idyllic beach areas from the Gold Coast to Melbourne’s Mornington Peninsula, Sydney, the Central Coast and areas in the near Byron Bay.

A new CoreLogic report has revealed that home values ​​in 256 suburbs across Australia are falling below seven figures – including 237 for houses and 19 for units in the year to May 2023.

In Sydney, Australia’s most expensive housing market, median property prices in 78 suburbs fell below $1 million.

CoreLogic economist Kaytlin Ezzy said the Reserve Bank’s 12 rate hikes in 13 months hit home values.

“A year and 12 rate hikes later, membership in the million-dollar club has become more exclusive, with many of last year’s entrants now falling below the million-dollar mark,” she said.

House prices previously fell below $1 million in more affordable parts of Sydney.

“The trend in the suburbs where values ​​have fallen below $1 million is in the more affordable locations on Sydney’s outer mortgage belt and fringe areas,” said Ms Ezzy.

While smaller declines have been recorded, it is these suburbs where median values ​​have fallen below the million dollar threshold.

“While the declines in Sydney’s upmarket markets have been some of the largest across the country, many of these markets had relatively high starting points that allowed them to maintain seven-figure price tags.”

The declines in Sydney include Seven Hills, in the west of the city, where the median home price dropped eight percent to $929,102, down from $1,009,471.

The slump was even more severe in Hoxton Park, near Liverpool, where house prices fell 9.7 percent to $948,608, down from $1,050,956.

In the southeast part of the city, the average price of a Maroubra apartment fell 7.6 percent to $982,942, down from $1,063,918.

Home prices in Umina Beach on the Central Coast fell 18.4 percent to $973,280, down from $1,192,813.

Regional NSW also had its share of the decline with 47 suburbs falling below seven figures, including Lennox Head, near Byron Bay, where apartment prices fell 23 percent to $999,452, down from $1,297,826 .

In Malua Bay on the south coast, home prices fell 15.7 percent to $890,800 from $1,056,750.

Brisbane saw 41 suburbs decline, including Annerley in the south of the city, where house prices fell 18.6 percent to $938,453, down from $1,153,055.

In regional Queensland, 23 suburbs fell out of favour, including a 14.3 percent drop in Tewantin near Noosa on the Sunshine Coast, sending prices down from $916,576 to $1,069,779.

The Gold Coast also fell with house prices at Biggera Waters falling 11 percent to $993,459, down from $1,115,929.

Melbourne had 30 suburbs that fell outside the seven-digit range, including a 19.9 percent drop in Tootgarook on the Mornington Peninsula, where house prices fell from $1,174,456 to $941,133.

Regional Victoria saw 11 suburbs go outside the seven-figure range, including a 13.7 percent drop in Geelong’s Portarlington, sending house prices down from $1,036,063 to $893,640.

Canberra had 15 suburbs falling under $1 million, while house prices in Kaleen fell 15.8 percent to $951,572, down from $1,130,344.

Nationally, only one suburb bucked the trend Burns Beach, a coastal suburb 21 miles north of Perth, joins the $1 million club, with home prices rising 4.1 percent to $1,033,741, up from $993,335.

Perth had no suburbs falling under $1 million compared to six in Hobart and four in Adelaide.

The Reserve Bank’s 12 rate hikes since May 2022 — which have pushed cash rates to an 11-year high of 4.1 percent — have led to major annual declines in home prices as tighter monetary policy limits what banks can borrow .

Westpac on Friday joined ANZ and NAB in forecasting RBA rate hikes in July and August, bringing the spot rate to 4.6 percent, which would be the highest since 2011.

Bill Evans, Westpac’s chief economist, said an 8.6 percent minimum wage increase and a 5.75 percent wage increase, both of which take effect July 1, would be inflationary.

‘Given the remarkable resilience of the labor market to date; the prospect of adjustments to industrial relations regulations that will put pressure on wage growth; and the rise in wage expectations from recent pay decisions, we cannot ignore the prospects of even further increases in the cash rate,” he said.

April’s inflation rate of 6.8 percent was more than double the RBA target of 2 to 3 percent.

Buying a $1 million home or unit requires a $200,000 or 20 percent mortgage to borrow $800,000.

The latest rate hike in June, which went into effect Friday for variable-rate borrowers, pushes monthly repayments up $130 to $4,973, up from $4,843.

Annual repayments are now $22,776 higher than at the beginning of May 2022, when the Commonwealth Bank offered variable rates of 2.29 percent, compared to 6.34 percent now.

Two more rate hikes, as predicted by Westpac, ANZ and NAB, would bring the floating rate to 6.84 percent, increasing monthly repayments by another $264 to $5,237.

In just 14 months, someone buying a $1 million home with a 20 percent mortgage will pay $25,944 more per year to their bank than they did 14 months earlier.