Real estate market showing signs of recovery

If the property market is under pressure, the top end is usually the first to fall.

Simon and Emma Day at their house in Malvern East, Melbourne, with children Sam, 2, and Lucy, 4. Picture: Aaron Francis

If the property market is under pressure, the top end is usually the first to fall.

Last financial year, the number of properties that sold for more than $1 million fell across the country, down 17.2 per cent.

Tighter lending and weaker market conditions resulted in only 18.4 per cent of houses and 9.8 per cent of units in capital cities selling for at least $1m in the year to June.

Sydney and Melbourne wore the brunt of the downturn, with prices toppling 14.7 per cent and 10.8 per cent respectively from the market peak.

CoreLogic research analyst Cameron Kusher said contracting prices had been most visible at the top end of the market.

“Generally, we have seen the higher-value segment of the market recording the largest falls and it’s pretty clear in Melbourne. I mean, the inner east and the inner south have seen the largest falls in Melbourne and they’re the two most expensive regions of the city,” Mr Kusher said.

In Sydney, the share of houses selling for more than seven figures in the year to June fell to 30.2 per cent, the lowest since October 2014.

The slump in Melbourne resulted in 23.1 per cent of houses selling for more than $1m.

Smaller and more affordable markets such as Brisbane and Perth took minor hits to their luxury ends year-on-year.

Adelaide, however, defied the market and the share of $1m purchases grew to a historic high last financial year.

But changing levers within the market may see a conservative return in prices as the sector begins to stabilise, credit becomes easier to access and the chance of historically low interest rates falling further strengthens, potentially triggering a top-end turnaround.

Independent economist Andrew Wilson said this month would test the market and give an indication of the potential spring activity.

“The middle of the market has been dormant in the low market, sellers can wait it out,” he said.

Mr Kusher reckons the lower mid-range prices will prove attractive with upgrading buyers who could become strong players in the market and lead to better conditions in the top end.

Simon and Emma Day are ready for a new project. They have listed their Malvern East home in Melbourne’s eastern suburbs and are confident their five-year-old property will achieve a price of more than $1m when it goes to auction at the weekend.

Mr Day thinks it is a good time to be a buyer and a seller in the market, noting a shift in attitudes over their nine-month search.

“Property prices have come back in the last 12 to 18 months, making a few other options attainable and with the interest rates coming down the way they have it’s a nice time to get ahead (on the mortgage) quickly,” Mr Day said

Agents Ash Howarth and Daniel Wheeler of Marshall White — Stonnington will take the property to auction on August 24.