Despite falling dwelling values, there’s no big rise in sales under $400,000: Cameron Kusher

EXPERT OBSERVATION

Throughout the 2018-19 financial year, 26.0% of all houses sold nationally were under $400,000 and 32.5% of all unit sales were under $400,000.

Despite the weakening housing market the share of house sales under $400,000 was virtually unchanged from a year ago, down from 26.3% the previous year while the share of unit sales under $400,000 increased from 31.0% over the 2017-18 financial year.

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Source: CoreLogic 

Across the combined capital cities, 13.9% of house sales over the 2018-19 financial year were under $400,000 and 24.6% of unit sales were under this price point.

The share of house sales under $400,000 was virtually unchanged from the previous year, recorded at 13.8% while the share of unit sales was noticeably lower at 22.3%.

Despite house and unit values falling -8.7% and -5.9% respectively over the year, it is interesting to note that the share of unit sales under $400,000 has increased much more for units than houses.

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Source: CoreLogic 

Across the combined regional markets, 42.8% of all house sales over the past financial year and 54.3% of all unit sales were under $400,000.

Unlike the combined capital cities, the combined regional markets have seen the share of sales under $400,000 record a sizeable decline compared to the previous financial year when 44.1% of house sales and 55.6% of unit sales were below $400,000.

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Source: CoreLogic 

Over the 2018-19 financial year, 2.3% of all house sales in Sydney were below $400,000 compared to 2.0% over the previous financial year indicating a slight increase.

It was a similar story for units with 5.7% of all sales below $400,000 over the past year compared to 4.4% a year earlier.

Despite the recent declines in dwelling values in Sydney, there has not been any substantial increase in the share of sales below $400,000.

In regional NSW, the decline in dwelling values over the past year has been significant but not as large as that in Sydney.

At the end of the 2017-18 financial year, 29.3% of all house sales and 42.1% of all unit sales were under $400,000.

By the end or 2018-19, the share of sales under $400,000 had reduced to 28.5% for houses and 39.5% for units, indicating that falling dwelling values had led to no increase in the share of sales under $400,000.

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Source: CoreLogic 

Although Melbourne dwelling value shave fallen throughout the 20181-9 financial year there has been a further decline in the share of houses and units selling below $400,000.

The share of houses selling for less than $400,000 fell from 3.6% over the 2017-18 financial year to 2.9% over the 2018-19 financial year.

It’s a similar story for units that recorded a fall in the share of sales under $400,000 from 21.9% to 21.2% over the past two financial years.

The ongoing increases in values across regional Vic has resulted in a further decline in the share of sales under $400,000.

Over the 2017-18 financial year, 61.9% of houses and 81.2% of units sold for less than $400,000.

A year later, 56.1% of house sales and 78.5% of unit sales were less than $400,000.

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Source: CoreLogic 

Although Brisbane dwelling values have recorded a moderate fall over the past year, the share of house sales under $400,000 has reduced while the share of units selling under that price point has increased. Over the most recent financial year, 23.2% of houses and 53.5% of units sold for less than $400,000.

By comparison, over the 2017-18 financial year 25.0% of houses and 51.5% of units sold for less than $400,000.

The share of units selling under $400,000 was last as high as it is currently in 2012-13 financial year.

Despite ongoing falls in dwelling values across regional Qld, there has been virtually no change in the share of sales below $400,000 over the past two financial years.

The share of house sales under $400,000 has held firm, tracking from 41.6% of all sales to 41.7% between the 2017-18 and 2018-19 financial years.

The share of unit sales under $400,000 has increased marginally, from 55.8% to 56.0% over the past two financial years.

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Source: CoreLogic 

Over the 2018-19, financial year houses and units in Adelaide have recorded a reduced share of sales occurring under $400,000.

For houses, the share of sales under $400,000 fell to 35.8% from 39.6% the previous financial year while for units the share fell from 67.9% to 66.1%.

Although overall values have drifted slightly lower over the year, it hasn’t led to an increased share in sales under $400,000.

Although the majority of house and unit sales in regional SA are under $400,000, both have seen a reduced share of sales over the past year.

In June 2018, 80.8% of all house sales and 91.6% of all unit sales were under $400,000 compared to 76.1% and 88.8% respectively in June 2019.

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Source: CoreLogic 

With ongoing value declines over recent years across Perth, the share of sales under $400,000 for houses and units has increased over the most recent financial year, rising to 31.2% of houses sold from 28.7% the previous year while for units the  share has risen to 55.0% from 50.2%.

The share of house sales under $400,000 in regional WA is relatively unchanged over the past two years falling from 64.7% to 64.5%.

For units, the share of sales under $400,000 has fallen from 83.4% to 78.8%.

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Source: CoreLogic 

The ongoing rises in housing values in Hobart has led to a significant decline in sales under $400,000 in recent years.

The share of houses sold under $400,000 is at a record low having fallen from 43.0% over the 2017-18 financial year to 31.8% over the most recent year.

For units the share of sales under $400,000 has fallen from 65.9% to 57.8%.

Regional Tas has also seen a decline in sales under $400,000 as values have increased.

Over the 2017-18 financial year, 77.1% of house sales and 91.0% of unit sales were under $400,000.

By the end of the following financial year, these shares had fallen to 70.3% and 85.8% respectively.

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Source: CoreLogic 

As dwelling values have continued to fall in Darwin there has been a significant increase in unit sales under $400,000 while any increase in the share for houses has been much more muted.

Over the 2017-18 financial year, 26.8% of house sales and 61.2% of unit sales were under $400,000 compared to 26.0% and 67.4% over the most recent financial year.

In regional NT, the share of sales under $400,000 has increased over the past financial year.

Over the 2018-19 financial year, the share of houses sold under $400,000 was recorded at 39.0% and 77.1% for units.

For the 2017-18 financial year the share of sales under $400,000 were recorded at 36.4% for houses and 74.1% for units.

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Source: CoreLogic 

In Canberra, the share of sales under $400,000 has continued to trend lower as values have continued to climb (albeit at a slower pace).

Over the 2017-18 financial year, 6.8% of all house sales were under $400,000 compared to 5.0% over the most recent financial year.

For units, the share of sales under $400,000 reduced from 39.6% over the 2017-18 financial year to 36.0% in 2018-19.

The next financial year could look very different to what we have seen over the 2018-19 financial year. 

We’re only in mid-August and we’ve already seen interest rates reduced twice, serviceability floors on mortgages reduced and some recent rises in dwelling values in the largest capital cities.

While a significant rise in dwelling values isn’t expected, there is an expectation of a moderate increase in dwelling values, as a result the 2019-20 financial year is expected to see fewer sales under $400,000 than those recorded in 2018-19.

CAMERON KUSHER is the head of research for the Australian branch of CoreLogic.

Kusher regularly posts on the CoreLogic website.