The Millionaire Suburb Club
Australia’s million dollar property club grew dramatically during 2010.
This occurred despite the fact that at the same time capital city home values increased by only 4.7 per cent.
RP Data Property Pulse has confirmed a 35 per cent growth in the million dollar property market in 2010, which translates as an increase of over a third in the number of suburbs with median house prices of more than $1 million last year.
During the December quarter alone, 212 suburbs across the country recorded a median price of $1 million.
Despite a slump in Perth’s property market Peppermint Grove topped the list as Australia’s most expensive suburb, holding the crown for the third year running with a median price of $4.6 million. Sydney’s Vaucluse came in second.
Prices paid for Perth’s exclusive riverside properties in Peppermint Grove were on average almost $1 million more than properties purchased in Vaucluse.
Sydney boasts seven of the 10 dearest locations.
Of the 212 suburbs with a median price of at least $1 million, 56 per cent were in Sydney in New South Wales and 20 per cent of suburbs were located in Victoria. This was followed by Western Australia (12 per cent), Queensland (6 per cent), South Australia (3 per cent), Australian Capital Territory (2 per cent) and Northern Territory (0.5 per cent).
Sydney’s Ku-ring-gai council recorded the greatest number of suburbs in the million dollar club with 15 suburbs having a median price of $1 million or greater.
The Daily Telegraph observed that Sydney’s harbour and beachside suburbs has 351 of the top 543 homes sold in the top 10 suburbs in 2010.
RP Data results revealed that demand and price growth in premium sector property was strong last year.
“It indicates that residents are prepared to pay a hefty price to secure a property in a premium location,” said RP Data researcher Cameron Kusher.
Kusher noted that over the past five years, the premium sector typically fared quite well (outside of 2008) and has recorded strong growth in property values.
In 2005 only 78 suburbs across the country had a price tag of $1 million or more. In just five years the number of $1 million plus suburbs has increased by 172 per cent. Victoria recorded the greatest increase in suburbs with a $1 million price tag over the five years, increasing by 950 per cent during the period.
Kusher takes a conservative view of further suburbs breaking through the million-dollar ceiling this year.
“During 2011 we would expect that there is unlikely to be a further 35 per cent increase in the number of suburbs within the $1 million club. We are anticipating subdued residential property market conditions during the year and the premium sector’s performance will also likely be impacted by high interest rates and ongoing global economic uncertainty,” he added.
“These conditions are likely to hamper purchaser confidence and reduce the propensity of buyers to spend in excess of $1 million.”
On the subject of millionaires, an interesting aside: A survey of more than a thousand American millionaires has revealed that most do not feel rich. Indeed, the majority claimed that they would need to have at least $7.5 million in order to feel they were really wealthy.
Reuters reports that 42 percent of the millionaires surveyed by Fidelity Institutional Wealth Services said they were concerned that they would outlive their assets.
The average age of respondents was 56 years old and possessed $3.5 million of investable assets.
Reuters quoted Michael Durbin, president of Fidelity Institutional Wealth Services.
“They compare themselves to their peer group … and they are also thinking about the long period they will have in retirement and want more assets” to fund their lifestyle, said Durbin.