"The old belief that because of scarcity these properties would not fall much in this market, while more common housing stock would have bigger losses because of the amount available, has not proved correct. According to RP Data national research director Tim Lawless, this theory held true until recently when margin calls, devalued share portfolios, low company profits and lower than expected executive bonuses brought new conditions to the prestige sector. Now there is simply less discretionary income and lower demand for expensive homes.
"Demand has virtually come to a halt in some inner city areas," Lawless says.
RP Data has a stratified median house price index that divides each market into 10 layers, allowing analysis of different price segments.
In Brisbane, the most expensive tier fell 9 per cent and the least expensive fell 3 per cent.
Because no real improvement in business conditions is in sight, demand for prestige homes will remain relatively low, RP Data says"