Coastal suburbs join million-dollar club despite having country's biggest drop in sales

Two South Coast suburbs are among the country’s most expensive outside of the capital cities, recording a seven-figure median house price, despite a fall in house prices and the number of sales in the region over the past year.

Data from the Domain House Price Report reveals Mollymook Beach and Vincentia are among 103 suburbs in Australia’s regional ”million-dollar club”, alongside the likes of Noosa and Byron Bay.

The median house price for Vincentia, on the shores of Jervis Bay, is $1,250,000, while Mollymook Beach just made the list with a median house price of $1.04m.

Despite regional housing values rising over the past five months, a new analysis of year-on-year performance shows the market is still reeling from high interest rates and a shift in migration patterns back to pre-COVID levels.

CoreLogic’s quarterly Regional Market Update, which examines Australia’s 25 largest non-capital city regions, shows 18 areas recorded an annual decline in house values over the year to July 2023, including the Southern Highlands and Shoalhaven, which fell by 15 per cent.

The Southern Highlands and Shoalhaven region also recorded the largest drop in sales (-33.6 per cent), largest vendor discounting rate (-6.7 per cent), and longest time on market (79 days) – which is almost twice as long to sell than a year ago.

Raine & Horne Mollymook Milton principal Ben Pryde, who sold a home in Mollymook Beach for a record-breaking $10m in 2021, said until the pause on interest rates in July, the post-COVID market had been tough.

He said it was “reminiscent of the declining market from 2005 to 2010, which included the global financial crisis, post the early 2000 boom times”.

“Our records for the Milton-Ulladulla region show a whopping 65 per cent less sales this year when compared to the peak of the boom in 2021, although the sales numbers and sheer volume in 2021 had never been seen before,” Mr Pryde said.

With average days on the market in the Milton-Ulladulla region now exceeding 100 days, Mr Pryde said no area or price range had been immune to the softening market.

“After such a significant COVID-fuelled boom, it is really seen as a re-correction. Prices are still relatively high, just not as extreme,” he explained.

“The lower end of the market is still performing reasonably well, as is the higher end, however, these markets have still taken a hit in values in the vicinity of 25 to 30 per cent or more since early 2022 in the lead-up to the first interest rate rise.”

LJ Hooker Sanctuary Point Vincentia sales agent Tim Houston said, despite a slower market, Vincentia was still attracting a lot of interest with buyers from Sydney and Canberra looking for a sea change or holiday home.

He said vendors had adjusted well to the changing market conditions and were understanding that prices “probably peaked last year, but are naturally still hoping to achieve a premium”.

“Given three years of 10 to 27 per cent yearly growth, the overwhelming majority of homes are still well above the value they were purchased for,” he said.

“We’re seeing a lot of first home buyers in the market after the changes to the scheme after 1 July, along with plenty of buyers coming from the Sydney region who are looking for investments, holiday homes or to make a sea change down the coast.”

Mr Pryde said where agents were quoting realistic prices and owners were meeting the market with their expectations, there were still plenty of sales to be made.

“There is a decent pool of cash buyers and buyers with pre-approvals that are ready to pounce if the right property becomes available, at the right price,” he said.

“Buyers had generally been sitting on their hands, not willing to make the compromises they were during the COVID boom. There is less of a sense of urgency, but this is slowly beginning to change.”

With a pause in interest rate rises, Mr Pryde said some buyers could “see the light at the end of the tunnel”.

“However, we still have the issue of the ‘mortgage cliff’ as more people come off fixed interest rates, especially those that purchased investment properties and holiday homes on the coast during COVID,” he said.

“With the cost of living skyrocketing, some of these owners are getting out, just making less of a profit than what they may have 12 months ago.

“Although it seems that the pause on interest rates and the more buoyant spring market may counteract the potential increased number of properties hitting the market due to property owners coming off fixed interest rates.

“Some borrowers are simply battening down the hatches and riding out the storm in hope of interest rates coming back by an estimated 1 per cent throughout 2024.”