Whether cheap or expensive, demand for property remains high

Inflated interest rates and higher-than-usual media house prices are unsurprisingly making the demand for affordable housing strong. However, according to PropTrack, there is also a growing demand for high-end properties.

“High home loan rates have reduced buyers’ borrowing power, leading to increased demand and higher growth rates for more affordable properties,” said PropTrack senior audience analyst Karen Dellow.

“The latest data confirms this trend, but it also shows significant growth in the high-end market. Supply and demand are the main drivers of property price growth, and the data indicates that demand for expensive properties is as strong as that for cheaper ones.”

As interest rates rose in 2022, the sale of high-end properties saw a cooldown. However, now properties in the 85th and 95th percentile are growing quicker than the national median house price.

“While many buyers are adjusting their budgets and purchasing more affordable homes, others are not restricted by price. By analysing percentile sale price data, which shows price growth rates across different market segments, we see a clearer picture,” said Dellow.

“Throughout the pandemic, higher percentile prices increased faster than lower percentile prices.”

There are a variety of factors driving these trends. One major one is the current rental crisis, which has pushed many towards purchasing property to escape the pressure.

With the smaller and cheaper properties being snagged, there is increased demand in the lower percentile market.

Compounding this is more investor activity, said Dellow, with many re-entering the market and claiming similar affordable properties.

Dellow said: “However, continued growth in higher percentiles suggests sustained demand for expensive properties, unaffected by the usual market constraints.

“Towards the end of the pandemic and into 2022, higher percentile units saw the highest price growth. However, as interest rates rose, growth in these tiers slowed, and the lower percentiles now show higher growth rates.”

Across Australia, the percentile sale prices are broken down as:

• 15th percentile: $475,000
• 25th percentile: $575,000
• Median price: $785,000
• 75th percentile: $1,180,000
• 85th percentile: $1,515,000
• 95th percentile: $2,485,000

These figures were much more inflated across the capitals, with Greater Sydney seeing a median of $1,420,000 and Greater Melbourne at $870,000.

“Sydney shows the largest variance, with a $3.43 million gap between these tiers. Canberra’s 95th percentile is 1.6 times the 15th percentile price – a $1.22 million difference – making even the cheapest houses pricey,” said Dellow.

“The ongoing rental crisis and the influx of first home buyers and investors into the market have prompted notable price increases in lower percentile properties. Yet persistent growth in higher property price percentiles indicates continued strength in the top end of the market, despite the interest rate hikes of the past few years.

“Despite the reduced borrowing power of buyers, which has spurred demand for more affordable homes, the top end of the market continues to thrive … While affordability challenges loom large for many prospective buyers, the property market remains buoyant across all segments, driven by strong demand both for affordable and premium properties.”

[Related: Home values across the country losing momentum]

Jack Campbell is the editor of Broker Daily. After graduating from the University of Wollongong in 2022, Jack began his journalistic career working on Broker Daily’s sister brand, HR Leader. In August 2023 he was made the news editor and worked alongside some talented journalists writing articles and recording podcasts.

To reach Jack, email him at: This email address is being protected from spambots. You need JavaScript enabled to view it.