Million dollar suburbs? Still makes sense to buy above the median price: John McGrath

A million dollars is a lot of money. But that is the budget needed by a typical family to own a reasonable home in a major city like Sydney that is fairly close to work (usually the CBD), notes property expert John McGrath in his recent Switzer blog.

While agreeing that it’s difficult for many young people to get into the market from a standing start, he argues that as our markets grow in value, so does the wealth of about seven out of 10 Australians because that’s how a major proportion own a home either outright or with a mortgage. 

But back to the million dollar budget. New research published by independent data analysts CoreLogic RPData shows the number of suburbs across Australia with a median property price above $1 million has risen by 31% in the past year alone. There were 406 suburbs nationwide with a median value above $1 million at the end of 2014. Now there’s 530.

He also notes that the number of million dollar suburbs rose by about the same amount nationally (31 percent) as it did in the capital cities combined (31 percent) and in our regional areas (33 percent). 

And no prizes for guessing which cities had the lion’s share of new million dollar suburbs — Sydney and Melbourne by a country mile. 

Breaking down the numbers into state figures, New South Wales experienced a 32.7% bump in the number of $1 million suburbs but it was Victoria leading the way with 46.7 percent. 

Among the rest: 15.4% in Queensland; -7.7 percent in South Australia; -9.5 percent in Western Australia; and no change in Tasmania, the Northern Territory and the Australian Capital Territory. 

Putting New South Wales and Victoria together, these two states now account for 85 percent of all $1 million suburbs nationwide. 

CoreLogic RPData also put together a list of the Top 10 most expensive suburbs nationally for houses and apartments as of the end of 2015. 

The median prices for the Top 10 house suburbs ranged from around $3.3 million in Whale Beach on Sydney’s Northern Beaches up to $6.3 million in Centennial Park in Sydney’s Eastern Suburbs. 

The median prices for the Top 10 apartment suburbs ranged from around $1.2 million in North Ryde in Sydney’s Northern Districts to $2.2 million in Point Piper in Sydney’s Eastern Suburbs.

Top 10 Most Expensive Suburbs – Houses 

1. Centennial Park, Sydney 

2. Point Piper, Sydney 

3. Darling Point, Sydney 

4. Vaucluse, Sydney 

5. Bellevue Hill, Sydney 

6. Tamarama, Sydney

7. Dover Heights, Sydney 

8. Peppermint Grove, Perth 

9. Double Bay, Sydney 

10. Whale Beach, Sydney 

Top 10 Most Expensive Suburbs – Apartments 

1. Point Piper, Sydney 

2. Darling Point, Sydney 

3. The Rocks, Sydney 

4. Cabarita, Sydney 

5. Millers Point, Sydney 

6. Cremorne Point, Sydney 

7. Huntleys Cove, Sydney 

8. Balmain East, Sydney

9. Tamarama, Sydney 

10. North Ryde, Sydney

Of course, a million dollar median means the middle price, so there’s an equal number of homes valued below $1 million as there are above $1 million. But obviously, a suburb with a $1 million median is going to have more expensive housing all round. 

McGrath says it is still better to buy above a suburb’s median because that means getting a superior product to what is ‘the typical home’ for the area. 

A property that is 10-20 percent above the median price is going to have better features, providing a better lifestyle and more than likely better capital growth over the long term, he notes.