The newest suburbs in Australia to crack the million-dollar mark

The newest suburbs in Australia to crack the million-dollar mark

COVID-19 and the economic downturn has done little to dampen the rise of million-dollar suburbs in Australia, new data reveals, though prices have come down more generally in the past three months.

Forty-six suburbs across the country entered the million-dollar club in the 12 months to June 2020, according to REA Group data.

Melbourne led the charge, with 24 suburbs tipping past the million-dollar median house price point, followed by Sydney with 14 and Brisbane with seven.

But median house prices in 10 suburbs fell below the million-dollar mark. Sydney and Melbourne saw four and three suburbs drop off the list respectively. This was followed by two suburbs in Adelaide and one in Brisbane.

It’s worth noting that suburbs with fewer than 30 sales in this period were excluded.

Sydney and Melbourne lead Australia’s premium property market

REA Group chief economist Nerida Conisbee said the top end of the property market has been “one of the most stable property markets during the COVID-19 pandemic”, as high-income sectors have yet to see widespread job losses.

“Over the last 12 months, more suburbs have entered the million-dollar club than suburbs that have fallen out, but there are still some opportunities to get into a premium suburb for six figures,” she said, adding that this is still possible in Brisbane and Adelaide.

Melbourne saw the greatest jump in suburbs with median prices in the seven figures, tallying 119 suburbs in the list, but Ms Conisbee said it was too early to tell how the second lockdown could impact the property market.

She added that Sydney homebuyers could find it harder to purchase a property close to the city with a six-figure budget.

“Highlighting the extreme pricing of Sydney, 15 suburbs joined the million-dollar club, now bringing the total to 209 million-dollar suburbs, and making it difficult to find an inner or middle ring suburb for under a million dollars,” Ms Conisbee said.

Why the property market is remaining stable

While national real estate prices have been edging lower in the past three months, the annual figures are still positive. Property values increased by 7.1 per cent nationally in the 12 months to July 2020, the latest CoreLogic data showed, but they fell 1.6 per cent in the three months to July.

CoreLogic’s head of research Tim Lawless said low housing stock and buyer incentives has helped protect the real estate market during COVID-19.

“Advertised supply levels have remained tight, with the total number of properties for sale falling a further 4.3 per cent in the four weeks to July 27, sitting 15.2 per cent below where they were this time last year,” he said.

“Additionally, increased demand driven by housing specific incentives from both federal and state governments, especially for first home buyers, have become more substantial.”

Ms Conisbee said housing prices have remained “stable”, despite the economic recession. She attributed this to four factors:

  • High levels of stimulus.
  • A stable banking system.
  • Mortgage repayment deferrals.
  • Relative confidence among buyers, particularly before the shutdowns.

Should you refinance your mortgage?

If real estate values have grown in your areas, it’s possible that you may have more equity in your property. With record-low interest rates, it may be a good opportunity to refinance your mortgage and pay a potentially lower interest rate.

External refinancing jumped about 50 per cent in the 12 months to June 2020, indicating many are taking advantage of the low interest rate environment.

If you’re an owner-occupier with substantial equity in your property, chances are lenders may see you as a reliable, low-risk borrower, and they may be more willing to do business with you. If you’d prefer not to move to another bank, your existing lender may also consider your request for a rate reduction.

But refinancing may not be for everyone. For instance, if you have plans to sell your property in the short to medium term, it may not be worth switching to a low fixed rate home loan.

New suburbs in the million-dollar club

Melbourne Sydney Brisbane
Blackburn North - $1.08m Arncliffe - $1.105m Samford Valley - $1.1m
Blackburn South - $1.101m Asquith - $1,019,500 Bardon - $1.01m
Box Hill South - $1,266,666 Belmore - $1,030,500 West End - $1.05m
Brunswick East - $1.001m Berowra Heights - $1.03m Fig Tree Pocket - $1.17m
Burwood East - $1,084,500 Bexley - $1,251,500 Ashgrove - $1.03m
Chadstone - $1.01m Glenwood - $1.04m Clayfield - $1,092,500
Cheltenham - $1,035,500 Jannali - $1.11m Grange - $1,123,500
Coburg - $1,027,500 Menai - $1.04m  
Collingwood - $1.075m Mount Colah - $1,062,500  
Edithvale - $1m Northmead - $1.01m  
Flemington - $1,019,500 Picnic Point - $1.05m  
Kensington - $1,115,500 The Ponds - $1.037m  
Kingsville - $1,017,500 Wamberal - $1.025m  
Maribyrnong - $1,012,500 Winston Hills - $1.022m  
Mentone - $1,040,500 Yarrawarrah - $1,023,500  
Mitcham - $1.02m    
Moorabbin - $1.14m    
Mt Martha - $1,022,500    
Nunawading - $1,035,500    
Preston - $1,010,500    
Rosanna - $1.115m    
Seddon - $1,009,500    
Vermont - $1.02m    
Wantirna South - $1,029,500    

Source: REA Group. Data is for the 12-month median price for houses, based on at least 30 sales in a suburb.

Did you find this helpful? Why not share this news?

Advertisement

RateCity

Money Health Newsletter

Subscribe for news, tips and expert opinions to help you make smarter financial decisions

By signing up, you agree to the ratecity.com.au Privacy & Cookies Policy and Terms of Use, Disclaimer & Privacy Policy

Advertisement

Learn more about home loans

What are the pros and cons of no-deposit home loans?

It’s no longer possible to get a no-deposit home loan in Australia. In some circumstances, you might be able to take out a mortgage with a 5 per cent deposit – but before you do so, it’s important to weigh up the pros and cons.

The big advantage of borrowing 95 per cent (also known as a 95 per cent home loan) is that you get to buy your property sooner. That may be particularly important if you plan to purchase in a rising market, where prices are increasing faster than you can accumulate savings.

But 95 per cent home loans also have disadvantages. First, the 95 per cent home loan market is relatively small, so you’ll have fewer options to choose from. Second, you’ll probably have to pay LMI (lender’s mortgage insurance). Third, you’ll probably be charged a higher interest rate. Fourth, the more you borrow, the more you’ll ultimately have to pay in interest. Fifth, if your property declines in value, your mortgage might end up being worth more than your home.

Does Australia have no cost refinancing?

No Cost Refinancing is an option available in the US where the lender or broker covers your switching costs, such as appraisal fees and settlement costs. Unfortunately, no cost refinancing isn’t available in Australia.

Can I change jobs while I am applying for a home loan?

Whether you’re a new borrower or you’re refinancing your home loan, many lenders require you to be in a permanent job with the same employer for at least 6 months before applying for a home loan. Different lenders have different requirements. 

If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your chances of successfully completing the process. Contacting the lender as soon as you know your employment situation is changing may allow you to work something out. 

Can I get a home loan if I am on an employment contract?

Some lenders will allow you to apply for a mortgage if you are a contractor or freelancer. However, many lenders prefer you to be in a permanent, ongoing role, because a more stable income means you’re more likely to keep up with your repayments.

If you’re a contractor, freelancer, or are otherwise self-employed, it may still be possible to apply for a low-doc home loan, as these mortgages require less specific proof of income.

Will I have to pay lenders' mortgage insurance twice if I refinance?

If your deposit was less than 20 per cent of your property’s value when you took out your original loan, you may have paid lenders’ mortgage insurance (LMI) to cover the lender against the risk that you may default on your repayments. 

If you refinance to a new home loan, but still don’t have enough deposit and/or equity to provide 20 per cent security, you’ll need to pay for the lender’s LMI a second time. This could potentially add thousands or tens of thousands of dollars in upfront costs to your mortgage, so it’s important to consider whether the financial benefits of refinancing may be worth these costs.

Is there a limit to how many times I can refinance?

There is no set limit to how many times you are allowed to refinance. Some surveyed RateCity users have refinanced up to three times.

However, if you refinance several times in short succession, it could affect your credit score. Lenders assess your credit score when you apply for new loans, so if you end up with bad credit, you may not be able to refinance if and when you really need to.

Before refinancing multiple times, consider getting a copy of your credit report and ensure your credit history is in good shape for future refinances.

I have a poor credit rating. Am I still able to get a mortgage?

Some lenders still allow you to apply for a home loan if you have impaired credit. However, you may pay a slightly higher interest rate and/or higher fees. This is to help offset the higher risk that you may default on your repayments.

I can't pick a loan. Should I apply to multiple lenders?

Applying for home loans with multiple lenders at once can affect your credit history, as multiple loan applications in short succession can make you look like a risky borrower. Comparing home loans from different lenders, assessing their features and benefits, and making one application to a preferred lender may help to improve your chances of success

Will I be paying two mortgages at once when I refinance?

No, given the way the loan and title transfer works, you will not have to pay two mortgages at the one time. You will make your last monthly repayment on loan number one and then the following month you will start paying off loan number two.

If I don't like my new lender after I refinance, can I go back to my previous lender?

If you wish to return to your previous lender after refinancing, you will have to go through the refinancing process again and pay a second set of discharge and upfront fees. 

Therefore, before you refinance, it’s important to weigh up the new prospective lender against your current lender in a number of areas, including fees, flexibility, customer service and interest rate.

Can I refinance if I have other products bundled with my home loan?

If your home loan was part of a package deal that included access to credit cards, transaction accounts or term deposits from the same lender, switching all of these over to a new lender can seem daunting. However, some lenders offer to manage part of this process for you as an incentive to refinance with them – contact your lender to learn more about what they offer.

What are the responsibilities of a mortgage broker?

Mortgage brokers act as the go-between for borrowers looking for a home loan and the lenders offering the loan. They offer personalised advice to help borrowers choose the right home loan for their needs.

In Australia, mortgage brokers are required by law to carry an Australian Credit License (ACL) if they offer credit assistance services. Which is the legal term for guidance regarding the different kinds of credit offered by lenders, including home loan mortgages. They may not need this license if they are working for an aggregator, for instance, as a franchisee. In both these situations, they need to comply with the regulations laid down by the Australian Securities and Investments Commission (ASIC).

These regulations, which are stipulated by Australian legislation, require mortgage brokers to comply with what are called “responsible lending” and “best interest” obligations. Responsible lending obligations mean brokers have to suggest “suitable” home loans. This means loans that you can easily qualify for,  actually meet your needs, and don’t prove unnecessarily challenging for you.

Starting 1 January 2021, mortgage brokers must comply with best interest obligations in addition to responsible lending obligations. These require mortgage brokers to act in the best interest of their customers and also requires them to prioritise their customers’ interests over their own. For instance, a mortgage broker may not recommend a lender who gives them a commission if that lender’s home loan offer does not benefit that particular customer.

How to break up with your mortgage broker

If you find a mortgage broker giving you generic advice or trying to sell you a competitive offer from an unsuitable lender, you might be better off  breaking up with the mortgage broker and consulting someone else. Breaking up with a mortgage broker can be done over the phone, or via email. You can also raise a complaint, either with the broker’s aggregator or with the Australian Financial Complaints Authority as necessary.

As licensed industry professionals, mortgage brokers have the responsibility of giving you accurate advice so that you know what to expect when you apply for a home loan. You may have approached the mortgage broker, for instance, because you have questions about the terms of a home loan a lender offered you. 

You should remember that mortgage brokers are obliged by law to act in your best interests and as part of complying with The Australian Securities and Investments Commission’s (ASIC) regulations. If you feel you didn’t get the right advice from the mortgage broker, or that you lost money as a result of accepting the broker’s suggestions regarding a lender or home loan offer, you can file a complaint with the ASIC and seek compensation. 

When you first speak to a mortgage broker, consider asking them about their Lender Panel, which is the list of lenders they usually recommend and who may pay them a commission. This information can help you decide if the advice they give you has anything to do with the remuneration they may receive from one or more lenders.

Do mortgage brokers need a consumer credit license?

In Australia, mortgage brokers are defined by law as being credit service or assistance providers, meaning that they help borrowers connect with lenders. Mortgage brokers may not always need a consumer credit license however if they’re operating solo they will need an Australian Credit License (ACL). Further, they may also need to comply with requirements asking them to mention their license number in full.

Some mortgage brokers can be “credit representatives”, or franchisees of a mortgage aggregator. In this case, if the aggregator has a license, the mortgage broker need not have one. The reasoning for this is that the franchise agreement usually requires mortgage brokers to comply with the laws applicable to the aggregator. If you’re speaking to a mortgage broker, you can ask them if they receive commissions from lenders, which is a good indicator that they need to be licensed. Consider requesting their license details if they don’t give you the details beforehand. 

You should remember that such a license protects you if you’re given incorrect or misleading advice that results in a home loan application rejection or any financial loss. Brokers are regulated by the Australian Securities & Investment Commission (ASIC), as per the National Consumer Credit Protection (NCCP) Act.