WA’s million dollar club swells with more than 30 new markets

Kim Macdonald The West Australian
Sun, 6 October 2024 2:00AM

Once deemed ‘Scabs’, Scarborough is preparing for a $20 million penthouse. Pictured: Artists’ impression of Scarborough’s Myka Residences Credit: supplied/supplied

An upcoming penthouse in Scarborough — set to hit the market for an eye-watering $20 million — says it all.

Once labelled Armadale by the Sea, it is one of many gentrifying suburbs in Perth to join the million-dollar club, a formerly exclusive group featuring areas where the median property carries a seven-figure price tag.

Scarborough is among more than 30 new entrants this year, achieving a $1.215m median price for houses after a 26.6 per cent increase over the year to August.

Units there now sit at a $1.04m median thanks to a 12.7 per cent boost over the same time period, according to CoreLogic.

But the price tags in the upcoming beachfront Myka complex, by developer Gary Dempsey, highlights a growing exclusivity in parts of Perth.

The $17m to $20m that will be sought for the penthouse is about six times Scarborough’s current record price of $3.225m.

Mr Dempsey said the starting price at the 14-level beachfront complex will be $4m, and he said they will be the most exclusive apartments between Hillarys and Swanbourne.

The price tags in the upcoming beachfront Myka complex, by developer Gary Dempsey, highlights a growing exclusivity in parts of Perth. Credit: supplied

The $17m to $20m that will be sought for the penthouse is about six times Scarborough’s current record price of $3.225m. Credit: supplied

“There will be no affordable housing, it is unashamedly super high-end,” he said.

During the planning approval stage, when he sought a height exemption above the current limits, Mr Dempsey convinced the council to not impose a portion of affordable housing, arguing a high-end development was a form of housing diversity, too.

He said the complex’s ability to convince cashed-up locals to sell their beachside houses in favour of apartment life — thereby freeing up a supply of big family homes — required guaranteed exclusivity.

“People don’t want FIFO . . . and social housing — it loses its appeal,” he said.

In keeping with the exclusive theme, the block will not have a ground-floor cafe, to ensure there are no delivery trucks or patrons disturbing the peace.

Scarborough’s Myka complex. Credit: supplied/supplied

Living spaces in each apartment will be a massive 300sqm and 600sqm. Sliding glass doors on the balcony will ensure the view can be enjoyed year-round and the storerooms will be big enough to park a caravan.

Having grown up in the area, Mr Dempsey admitted there was a time he didn’t have too many good things to say about the suburb referred to as Scabs.

In the 1950s it was dominated by bodgies and widgies who rocked out at the Snake Pit.

Later, the White Sands Tavern was known as one of the roughest places in Perth. And for a while, bikies, schoolies and toolies developed a fondness for the area, too.

But he claims that all changed about six to eight years ago with the $100m foreshore redevelopment, which delivered several new public amenities along the 1.6km of beachfront.

It helped to propel Scarborough into the million-dollar club, among 31 new house and four new unit markets, and one returning suburb.

According to CoreLogic, this year there has been a 56.3 per cent increase in the number of seven-figure suburbs in WA compared to last year. This comes on the back of Perth’s nation-leading price growth of 24.2 per cent over the year to August.

New entrants includes one market in regional WA — Dunsborough — with a median of $1,223,279. It joins existing members Quindalup ($1,377,367) and Yallingup ($1,654,267) in the club.

But compared to the rest of the nation, WA remains one of the cheaper markets.

According to CoreLogic, 29.3 per cent of the 4772 suburbs analysed nationally recorded a current median value at or above $1m, up from a recent low of 21.7 per cent in January 2023.

CoreLogic economist Kaytlin Ezzy said it signalled worsening affordability across the country.

“At the onset of COVID, just 14.3 per cent of house and unit markets had a median value at or above the $1m mark,” she said.

“With almost 30 per cent of suburbs now posting a seven-figure median, the increase is a natural consequence of rising values and worsening affordability.”

Sydney — Australia’s most expensive market with a dwelling median of $1,180,463 — recorded the highest net rise in million-dollar markets over the year, with an extra 46 suburbs added.

Brisbane also added 46 to the club, following a 15 per cent property price hike over the year.

But Melbourne and regional Victoria, where dwelling values fell by 1 per cent over the year, only added four suburbs with a seven-figure median.

“An unfavourable investment taxation environment, a higher level of new housing completions, and an above average level of advertised supply have put downwards pressure on values, resulting in fewer new million-dollar entrants in Melbourne and a net decline across Regional Victoria,” Ms Ezzy said.

In Adelaide, 104 of the 284 suburbs analysed had a seven-figure median in August, up from 75 this time last year.

Hobart’s million-dollar club remained steady at three, despite a 1.2 per cent drop in property values.

Meanwhile in Canberra, one unit market and 45 house markets made the $1m-plus median, after six suburbs rejoined the list. There are no suburbs with a seven-figure price median in Darwin.

So what happens from here?

ANZ economists predict Perth property prices will end this year up 25.1 per cent compared to the start of 2024, giving it the biggest property gains in the country.

It comes amid the city’s continuing supply problem, with sales outpacing new listings and the population growing faster than the dwelling stock over the past few years.

ANZ predicts Perth prices will increase a further 7.4 per cent next year — with more price growth across the nation.

But the bank predicts Perth’s rate of growth will slow to 4.9 per cent in 2026, below the national average.

Real estate analyst Gavin Hegney believes some homes and markets in the $1m to $2m range are currently overvalued after a massive amount of Eastern States investment and a strong fear of missing out.

But he is confident about the short to medium-term for properties and suburbs that are genuinely valued within the exclusive threshold.

The anticipated drop in interest rates next year will make the cost of borrowing cheaper, allowing bigger loans and subsequently, putting price pressure on the higher end of the market.

Provided there are no great economic shocks to fuel unemployment, or even the fear of joblessness, Mr Hegney thinks the upper-level market will continue rising in value.

He said the cheaper end of the market was more vulnerable, particularly if Eastern States investors decided to cash in on capital gains on their investments in entry-level priced suburbs, such as Armadale and Gosnells.

The more affordable suburbs have experienced bigger gains over the past year compared to the more moderate $1m to $2m market. But the luxury market is facing a stronger future.

“I’d rather own a $1m property in a $1.5m area than a $1m home in a $500,000 area,” Mr Hegney said.