Luxury properties have failed to excite home buyers, with house values plummeting in Australia’s most expensive capital cities.
According to new research from RP Data, dwellings in the most expensive capital city suburbs recorded a 5.4 per cent loss in house prices.
In contrast, home values in the middle 60 per cent of suburbs were down by only 0.9 per cent, while dwellings located in the cheapest 20 per cent of suburbs were the best performers – recording just 0.5 per cent fall.
RP Data’s research director Tim Lawless said the drop in luxury house prices managed to drag down the entire property market, with dwelling values in Australia's capital cities tapering by 1.2 per cent on a seasonally-adjusted basis.
“The luxury end of the housing market is showing its volatility. During the growth phase of the cycle the most expensive homes realised the highest capital gains. Yet as the market cools premium home values seem to be losing steam the fastest,” he said.
Rismark Joint managing director Christopher Joye agreed and said the uber-luxury segment has had the rug whipped from under it via a combination of the soaring Aussie dollar and the volatile share market.
“A final fly in the ointment is the much lower growth - and pay packets - expected in the financial services industry going forward. Luxury homes in areas like Sydney’s Eastern Suburbs will continue to face valuation headwinds as banks deal with the new normal of subdued credit growth,” he said.