Builders oust bankers in Australia's posh suburbs, while blue-collar areas move upmarket

Dozens of traditionally wealthy suburbs - including Toorak in Melbourne, Double Bay in Sydney and Subiaco in Perth - have all seen average house prices topple in the past 12 months, according to sales data compiled from property information service RP Data.

See the list of affected suburbs below

The Gold Coast suburb of Broadbeach, where houses were fetching an average of $2.3 million in the first six months of 2008, prices fell to $1.36 million in the months immediately after the financial crisis hit.

In the Adelaide suburb of Thorngate, the median house price in the first six months of 2008 was $1.86 million. It has since fallen to $1.29 million.

Trading places

Demographer Bernard Salt, a partner at KPMG, said the financial crisis was taking a toll on posher suburbs - and a new breed of wealthy residents would surface.

"The ‘oomph’… has been taken out of the top 20 per cent of income earners," Mr Salt said.

"People just don’t have the means to maintain those expensive lifestyles anymore."

Mr Salt said he expected prices to continue to fall in suburbs like Toorak over the next 12 months.

Louis Christopher, managing director of SQM Research, said the upper-end of the market was always more volatile when the economy was suffering.

"I think we can directly contribute the economic downturn for the falls," Mr Christopher, who also heads property research at Advisor Edge, said.

"When you see a recession, the upper-end of the market tends to be more affected.

"Finance executives have been hit hard."

Many homes in posh suburbs were being rented out because owners were having trouble selling, he said.

"They’ve ended up becoming reluctant landlords."

New faces

Mr Salt said people like banking executives, who have traditionally populated prestigious suburbs, would be forced to move out and construction company bosses would most likely replace them.

"I think we will see a demographic shift (in these suburbs)… out will go the finance executives and in will come the builders."

Meanwhile, house values in traditionally blue-collar regions such as Redfern in Sydney, Highgate in Perth and Yeronga in Brisbane have skyrocketed in recent years, attracting people with higher income brackets.

In Redfern and neighbouring Alexandria – areas which have traditionally been filled with public housing and factories – average house prices have more than doubled in the last decade to hit between $700,000 and $750,000 in 2008.

In 2001, adults earning more than $52,000 a year made up 16 per cent of Redfern’s working population. By 2006, that proportion had grown to 25 per cent.

A similar jump occurred in Highgate, where 10 per cent of residents were earning over $52,000 a year in 2001. More than 20 per cent had an income of that size in 2006.

Blue-collar 'burbs

Mr Salt said gentrification in cheaper suburbs would continue as higher-income earners became more disciplined in their spending.

The process would cascade, with the upper classes moving into middle-class areas and middle-income residents moving to lower-middle-class suburbs.

Mr Christopher said many suburbs were on their way to rival traditionally prestigious postcodes.

"Inner-metropolitan working-class suburbs have been turning into more affluent suburbs," Mr Christopher said.

But the gentrification could become problematic as the economy worsens, Mr Salt warned.

"(Lower-income families) are forced into rental accommodation," Mr Salt said.

"They can become further removed from Redfern, moving out to Macquarie Fields (in Sydney’s outskirts) or further out into NSW or to other cities.

"That’s when you get social dislocation… people begin feeling marginalised."

Source: www.news.com.au/business/money/story/0,28323,25015591-5013951,00.html