Research by CoreLogic using the stratified hedonic index shows that the most expensive 25 per cent of properties recorded the greatest value growth over the past year.
Over the 12 months to August 2017, the most expensive 25 per cent of residential properties nationally recorded value growth of 11.4 per cent, compared to growth of 8.0 per cent across the middle 50 per cent of suburbs, and 2.9 per cent growth across the 25 per cent of most affordable suburbs.
Analyst Cameron Kusher said the national annual rate of value change has started to slow across all market segments over recent months.
Over the past 30 years, dwelling values across the most affordable 25 per cent rose by 1,517 per cent compared to increases of 580 per cent across the middle 50 per cent and 432 per cent across the most expensive 25 per cent.
“This highlights how affordability has deteriorated substantially at the more affordable end of the housing market,” Mr Kusher said.
In the combined capital cities, growth at the top end of town is at 4.6 per cent, against 9.5 per cent in the middle and 12.2 per cent at the lower end.
In regional markets, the change has been more moderate; at the lower end it was 2.5 per cent, against 4.6 per cent across the middle and 8.4 per cent at the top.
“Over recent years, demand has been for more affordable housing,” Mr Kusher said.
“However, [recently] the demand for luxury housing outside of the capital cities has risen.”
Only Melbourne and Darwin recorded the most change at the lower end and the least at the top. The others recorded the fastest rate of change either in the middle or at the top end of town.
“The result for Melbourne is likely due to the fact that Sydney and Melbourne are the strongest economies in the country and are jockeying to attract talent,” the analyst said.
“Melbourne has a significant competitive advantage over Sydney in terms of being able to offer more affordable housing, and the data seems to suggest that lower-priced housing is a big driver which has led to a surge in values across the lower and also middle segments of the market.”
He also said that the stratified hedonic index offers an “interesting look” into the performance of the national housing market.
“If the current housing market slowdown continues and turns into declines, watch for whether the most affordable sector of the market is relatively stronger performed than the more expensive segment,” Mr Kusher said.
“With record-high levels of household debt and significant first home buyer incentives over recent years, the trends in a future downturn could be different [from] what has been seen in the past.”