Australia has fewer million-dollar suburbs as the global financial crisis erodes home values, according to a report.
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The total number of suburbs where the median home price is $1 million or more fell to 134 in the year to the end of February, from 152 a year ago, according to real estate research agency RP Data, with median home prices plunging more than 20 per cent in the some suburbs.
"The top end of the market has always been seen as a bit of safe haven and has generally been immune to downturn,'' said RP Data senior research analyst Cameron Kusher, but the global financial crisis has "really impacted hard on high income earners'' resulting in the need to sell properties.
"Even through past recessions it's very rare to see these areas drop more than 20 per cent,'' Mr Kusher said.
"It is something new and something that hasn't been seen before.'' Four suburbs in Western Australia showed the average median price falling more then 20 per cent, based on monthly sales data.
New South Wales saw the largest fall in the number of million-dollar suburbs, losing eight in the year to February.
The suburb of Warrawee experienced the biggest plunge, with the median home price of $1.09 million in 2008, slumping to $895,000 in 2009.
Overall, the number of million-dollar NSW suburbs fell to 78 in 2009 from 86 in 2008, the report said.
The impact of the financial crisis, which accelerated late last year, has been driving the sales of top-end homes, Mr Kusher said.
Good times gone
Some high income-earners ''probably thought the good times would continue for a lot longer than they have,'' he said.
''They have missed out on bonuses, their share portfolios are worth half of what they were 18 months ago,'' Mr Kusher said. ''Some people have had to sell their properties.''
''Given the state of the economy, there are not a lot of people in a position to spend more than $1 million at the moment.''
Western Australia, where the economy is tied to the price and outlook of resources, saw the most rapid shrinkage of million-dollar neighbourhoods in percentage terms. The number of suburbs where the median home price was $1 million or more dropped 21 per cent, from 29 in 2008 to 23 in 2009.
The Perth suburb of Ardross led the price falls, with the median price tumbling 26.4 per cent in the year to February.
Five of Victoria's million-plus-neighbourhoods slipped under the threshold, bringing the total to 20 in 2009, a 20 per cent fall.
South Yarra lost the most, dropping 18.1 per cent, to $900,000 in 2009 from $1.1 in the twelve months to February 2008.
Queensland and South Australia both gained one-million-dollar-plus suburbs each in the year.
US price plunge
A plunge in US home prices linked to subprime loans set off the global financial crisis last year, igniting fears that drops of 20 per cent the US and UK could eventually hit Australia.
Official home prices have fallen 6.7 per cent in the year to March according to Australian Bureau of Statistics data, although unofficial measures show more resilience.
''This decline in prices, the largest since the Great Depression, comes in spite of the fact that subprime lending comprised only a tiny part of the local market while Australia never saw the overbuilding that occurred in other countries,'' wrote RBS economists Kieran Davies and Felicity Emmett in a note to clients.
''With this downward momentum now in place, as well as the prospect of a further large rise in unemployment, house prices could potentially fall further over coming months.''
The Federal Government extended the deadline for the full First Home Owners grant boost until the end of December, and in a reduced from till the end of 2009.
Economists link the resilience in sub-$500,000 home prices with the grant boost.
JP Morgan analyst Helen Kevans flagged the hazards of high risk borrowers entering the housing market ahead of an expected rise in the unemployment.
By government estimates, the jobless rate will rise to 8.25 per cent by the middle of 2010. The rate currently stands at 5.4 per cent. (Credit: The Sydney Morning Herald)
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