Dwelling market performance by value segment: GCCSA
Of the capital city markets, the high end of values has led growth across Sydney, Melbourne, Brisbane and Canberra.
The relatively large size and value of these cities also explains why the combined capital cities index has shown a significant uplift in the high end of the market.
Melbourne and Sydney show this cyclical pattern fairly consistently, where the most expensive parts of the housing market see deeper declines in downswing periods, and higher highs during an upswing phase.
More recently, this has been reflected in the change in values across the Northern Beaches of Sydney, a relatively high-end market which increased 6.4 per cent in value in the three months to February.
This was followed by a 5.3 per cent increase across the Baulkham Hills and Hawkesbury region.
In Melbourne, the lifestyle market of the Mornington Peninsula, which proved popular during Covid-19, is still leading quarterly growth at 7.9 per cent in the three months to February.
However, growth rates have been rising across the expensive Inner East of Melbourne, which was up 2.5 per cent in the month of February.
It is important to keep perspective of the long term patterns in growth across different segments of the market.
High-end property markets may seem excessively risky during downturn periods because they tend to lose the most value in a negative economic shock.
However, what is being observed across the market at the moment is that periods of upswing deliver higher returns across the more expensive segment of the property market.
Similarly, the low end of the housing market may appear subdued while the rest of the market is booming, but holds its value relatively well during downturns.
Looking at long term annualised growth rates of values within the capital cities suggests 10 year annualised growth is fairly uniform across the different value segments.
Over the course of 2021, the middle and lower value segments of the market are likely to follow the same trend as the high end, though growth rates are not expected to be as strong.