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This market will be the first to recover from the housing downturn

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Million-dollar property sales were among the first to fall when Australia’s property downturn began, and as the market begins its slow recovery, they’ll also be the properties seeing the largest improvements.

That’s the latest finding from property analytics firm, CoreLogic.

“Over recent months we have started to see some stabilising of housing market conditions,” analyst Cameron Kusher said.

“The data also shows that the largest improvement is occurring across the most expensive properties. Assuming this continues over the remainder of the current financial year the share of million dollar sales, particularly in Sydney and Melbourne, may increase over the coming year.”

This comes after a financial year which saw the percentage of million-dollar sales fall from 21.9 per cent of all house sales to just 18.4 per cent of houses in capital cities. For units, the percentage of properties transacting for at least $1 million fell from 11.5 per cent to 9.8 per cent.

Across the country, the percentage of million dollar sales fell from 14.7 per cent to 12.5 per cent for houses and 9.4 per cent for units.

As Kusher noted last year, falls in the most expensive portions of the market often precede falls in cheaper and middle-tier properties.

“With value growth slowing, the trends of the past are being repeated with the most expensive properties experiencing the most rapid slowdown in value growth,” Kusher said at the time.

“During the growth phase, it was these same properties that were also recording the highest rate of capital gain.”

However, improvements in expensive home sales are unlikely to trigger a speedy return to previous prices.

Earlier this month, CoreLogic said that while it appears the downturn is bottoming out, it will be some time before growth returns to levels seen at the beginning of 2017.

“There is no sign of a ‘v-shaped’ recovery,” head of research Tim Lawless said.

“The ongoing tightness in housing credit is expected to keep a rapid rebound in housing values at bay, despite the lowest mortgage rates since the 1950s.”

“No doubt policy makers will be keeping a close eye for signs of investor exuberance, or a more rapid acceleration in the recovery trend.”

“If values were to start appreciating rapidly, there could be a renewed round of policy responses aimed at keeping a lid on housing prices whilst at the same time, allowing low interest rates to stimulate the economy more broadly.”

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