Despite falling sharply during the downturn, the most expensive areas in Melbourne and Sydney are leading the market recovery, according to new data from CoreLogic.
In Sydney, the prices of top properties fell 16.7%. However, it's the market's second-most expensive tier that took the hardest fall, with values dropping 17.8%, the data showed.
In Melbourne, the values of top properties fell 16.8%, according to the data.
However, despite the decline in values, richer areas are leading the market recovery, the data showed.
In Melbourne, the value of the most expensive tenth of homes grew 1.3%, compared to the city-wide average of 0.1%, according to the data.
“The stronger result across the upper quartile partly reflects the fact that Sydney and Melbourne housing values are more expensive relative to other cities, but also that the middle to upper end of the Sydney and Melbourne housing markets are showing the stronger trajectory in housing values after recording deeper declines during the down phase,” said CoreLogic head of research Tim Lawless.
The Australian Prudential Regulation Authority’s (APRA) guideline change has likely driven the value growth, increasing the borrowing capacity of all Australians, including the wealthy ones who buy in the top market, according to CoreLogic analyst Cameron Kusher.
The wealthy have seen these enormous market movements as an opportunity, according to Lawless.
“With borrowing capacities recently increasing as a result of lower mortgage rates, and a reduced serviceability floor, existing owners may increasingly be looking to upgrade into more expensive homes. Despite value declines across the board, more expensive housing stock has generally recorded greater declines which may be offering homeowners the opportunity to upgrade into a more expensive property despite the recent value declines,” Lawless said.
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