Demand is strongest at $300,000-plus price point, but there is a million-dollar sweet spot for value: Tim Lawless

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By Tim Lawless
Tuesday, 21 February 2012

Over the 2011 calendar year, home values fell by 3.6% across the combined capital cities and sales volumes also eased as market activity slowed. The slowdown in buyer activity has made achieving sales much harder and for property professionals it has made finding commissions much more challenging. Data also shows that the premium end of the housing market has experienced greater value falls than those recorded for more affordable property types.

In terms of sales activity across the combined capital cities, homes priced between $300,000 and $400,000 have recorded the greatest volume of activity with 23.5% of all sales occurring within this price band. Over the year, 58.4% of all home sales have occurred at prices between $300,000 and $600,000. Sales of properties priced in excess of $1 million accounted for just 7.8% of all sales over the year.

Across individual capital cities, sales activity at prices between $300,000 and $400,000 accounted for the largest portion of sales in Sydney (19.1%), Melbourne (24.7%), Brisbane (29.4%) and Adelaide (29.5%). Property sales between $400,000 and $500,000 accounted for the greatest proportion of all sales in Perth (24.2%), Darwin (25.5%) and Canberra (32.7%) while in Hobart most sales occurred between $200,000 and $300,000 (29.7%).

Property sales in excess of $1 million were most prevalent within Sydney (11.3%), Melbourne (8.3%) and Perth (6.9%) while in every other capital city sales in excess of $1 million accounted for less than 4% of all sales.

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Although looking at the volume of sales provides a valuable insight of where demand is, from an agency perspective the value of the home is very important as it directly relates to commission payable. Across the capital cities, sales of homes priced between $400,000 and $500,000 had the greatest total value of sales, accounting for 16.6% of the total market. The $400,000 to $500,000 price point also accounted for 21.2% of the total volume of sales, suggesting that this is a market which is both attractive for purchasers and potentially most lucrative for sales agents. Properties priced between $1m and $2 million accounted for 14.9% of the total value of all sales making it the second largest price point in terms of value of sale.

Across individual capital cities, the $400,000 to $500,000 price band accounted for the greatest total value of sales in Melbourne (16.3%), Brisbane (22.2%), Perth (19.5%), Darwin (24.6%) and Canberra (27.1%). In Sydney, the $1 million to $2 million price point accounted for the greatest total value of sales (19.3%) and in Adelaide (23.7%) and Hobart (26.4%) it was the $300,000 to $400,000 price point.

The results highlight that with home values falling and sales volumes at below average levels, now more than ever property professionals need to understand where the strongest level of demand exists.

 

Tim Lawless is research director at RP Data.

This article originally appeared on SmartCompany

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