Are $5 Million Median House Prices The New Normal?
After a record-breaking couple of years for the Sydney property market, a growing number of eastern suburbs now find themselves with a median house price over $5 million.
Find out what it means for both buyers and sellers.
There’s no denying the past two years have been extraordinary for the Sydney property market. At the end of May 2022, Sydney house prices were up 12% year-on-year, while units had risen by 6.2%. Those gains come after Sydney median house prices rose almost 25% between mid-2020 and the start of 2022, with many eastern suburbs recording even larger increases. With multiple eastern suburbs now setting records with their new median house prices in excess of $5 million, we find out – is this our new normal?
The $5 million median club
Figures from PropTrack reveal that 17 Australian suburbs now have a median house price greater than $5 million. The data, released at the end of January, show that seven of the top ten suburbs with a median house price in excess of $5 million are found here in Sydney’s east.
Point Piper tops the list with a median of $10.15 million, followed by Tamarama in second place with a median of $9.6 million. Centennial Park takes out the fourth position with a median of $7.46 million, with Vaucluse at number five with a median of $7.45 million. In the sixth position is Bellevue Hill with its median of $7.285 million, followed by Double Bay at eighth with a median of $6.082 million and Dover Heights in tenth place with a median of $5.804 million.
The data also reveals that eight Australian suburbs saw their median house price spike by more than $1 million in the course of just one year. Here in the eastern suburbs, Double Bay’s median house price rose by a massive $1.506 million (35 per cent), while Bronte’s median increased by $1.212 million (34 per cent) to reach $5.6 million, and Dover Heights’s median jumped by $1.119 million (26 per cent).
Top suburbs with $4 million medians
Several more of Sydney’s eastern locales made the list of the top ten suburbs with medians between $4 million and $5 million. Rose Bay came in second with a median of $4.825 million, followed by Clovelly in fourth place with a median of $4.5 million. North Bondi’s median of $4.325 million saw it rank in seventh place, while Woollahra came in at ninth with a median of $4.325 million.
Why are median house prices skyrocketing in the eastern suburbs?
So, what’s driving median house prices up by so much in these suburbs? The answer is a booming prestige property market. While the overall Sydney real estate market has seen incredible growth in recent years, the luxury sector recorded its best-ever performance in 2021, with more than 45 sales over $20 million. According to NAB, Sydney’s prestige home values rose by 23.5% in the twelve months to April, compared to the 20.6% increase in prices in the broader market.
There’s no doubt such performance is remarkable, with PropTrack’s Cameron Kusher expressing surprise at the speed at which the top-end medians have risen. He says that until now, there simply haven’t been that many properties with a price tag over $5 million. He says, “there’s been a lot of demand for premium properties, and people are prepared to pay … high prices for them, simply because more money has been dedicated to housing.”
What does it mean for eastern suburbs vendors and buyers?
While quite a few of our eastern suburbs have seen median house prices rise dramatically, these huge price increases won’t apply equally to every property in these areas.
The median house price is calculated by compiling all the sale prices for houses in a suburb over a twelve-month period and then finding the price that falls in the middle of all those sale prices. So, if several trophy homes were sold for large sums during the year in a particular suburb, that suburb’s median price would be skewed much higher. At the other end of the spectrum, sometimes there will have been too few houses sold in a suburb over the course of a year to calculate a reliable median price at all.
If you’re thinking of buying or selling a house in the eastern suburbs, what do these new $5 million-plus medians mean for you? Buyers can take comfort in the fact that just because a suburb’s median house price has jumped by 30 or 40 per cent, it doesn’t necessarily mean every property in that suburb is now worth 30 or 40 per cent more. By the same token, property values across Sydney and the eastern suburbs have risen significantly over the last two years, so vendors choosing to sell now will have locked these gains in and ought to find themselves in a strong position to move on.
Looking for advice about selling or buying in Sydney’s eastern suburbs? Get in touch with our team today.