Buyers are targeting both affordable hotspots and high-end suburbs as interest rate cuts boost borrowing power.
The latest PropTrack data shows that while some of Australia’s cheapest suburbs are still topping the charts for price growth, pricey suburbs are beginning to attract more interest from buyers with more money to spend.
The data suggests that the easing of interest rates has led to rates of price growth beginning to converge across the nation, with the two-speed market that has seen Brisbane, Adelaide and Perth soar ahead of the other capital cities, starting to unwind.
Once-affordable cities and suburbs that previously topped the charts for price growth and demand are now cooling as prices reach affordability ceilings, with some investors cashing out and shifting focus to other markets on the way up.
Meanwhile, interest rate cuts have spurred renewed interest in traditionally pricey areas, with demand rising in many premium suburbs as buyers prepare to spend big as rates fall.
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REA Group executive manager of economics Angus Moore said the pace of price growth this year across Australia’s biggest capitals has been relatively even compared to previous years.
“The last few years have really been kind of two markets where Sydney and Melbourne were not growing particularly quickly, with prices basically flat across the back half of last year in Sydney and falling in Melbourne, while Adelaide, Perth and Brisbane were growing extremely quickly,” he said.
“Over the first six months of this year we’re seeing a fairly similar pace of growth across all those cities.”
“We’re seeing a bit more of a convergence in terms of that pace of growth, and that reflects smaller markets slowing down but also Sydney and Melbourne starting to grow a bit more solidly.”
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While prices have jumped rapidly in many affordable regions, pricier pockets of the capitals such as Sydney’s eastern suburbs are in high demand with buyers. Picture: Getty
Rate cuts were broadly supporting price growth, Mr Moore said, with further cuts expected to help reduce mortgage costs and improve buying power.
“That said we’re still not expecting particularly strong growth,” Mr Moore said. “Affordability is going to continue to remain a challenge but lower interest rates are certainly going to help.”
Where home prices have grown fastest this year
PropTrack data shows that many of the suburbs that recorded the quickest price growth so far this year were in smaller, more affordable regional markets where an influx of investor demand can trigger sudden prices rises.
Topping the list was Rangeway, a suburb of Geraldton where property investors have been busy flipping former government-owned houses for profit to capitalise on strong rental demand, helping to uplift the suburb’s median home value by 19% to $334,000 in just six months.
Other affordable Geraldton suburbs notched rapid gains, including Spalding (up 13%), Beachlands (up 12%) and Mount Tarcoola (up 12%), with the city overall recently recording the fourth fastest price growth of all regional cities.
The data uses PropTrack’s automated valuation model (AVM) to determine a suburb’s median property value.
The median house value in semi-rural Menangle has jumped 16% in six months amid increased housing development. Picture: realestate.com.au/sold
In the capitals, Menangle in Sydney’s outer south west recorded a 16% jump in its median house value to about $1.2 million, with new waves of buyers drawn to newly-built homes in the mostly rural suburb.
Other growing suburbs in that region priced around the $1 million mark recorded strong house price gains, including Claymore (up 12%) and Austral (up 11%), with values of turnkey homes strengthening amid high construction costs.
Mr Moore said affordability remained challenged despite recent rate cuts, which could encourage buyers to look in less expensive suburbs.
“Mortgages have been very costly, affordability has been a real constraint for buyers which has to some extent favoured more affordable areas,” he said.
But it wasn’t just outer suburbs where prices climbed higher. Fast house price growth was also recorded in pricier inner city suburbs such as Surry Hills (up 11%) and Darlinghurst (up 9%), where median house values are above $2 million.
This three-bedroom home in Surry Hills sold for $3.15 million earlier this year. Picture: realestate.com.au/sold
Mr Moore said further interest rate cuts, which lead to lower repayments and higher borrowing capacities, would support price growth in high value suburbs.
“As rates start to fall we might see more expensive areas start to perform a little better,” Mr Moore said.
“Interest rates coming down is going to be a tailwind for home prices broadly but may help that mid-to-top end a little bit more.”
This four bedroom house in Mildura sold for $730,000 in June. Picture: realestate.com.au/sold
Victoria’s strongest performing suburbs for house price growth included Mildura and two nearby suburbs, Merbein and Red Cliffs, where prices rose 6% in six months off the back of a spike in investor interest for affordable properties with strong rental yields.
“For winter, it’s hot,” said local real estate agent and One Agency Mildura principal Mark Thornton. “Naturally when you have a growing market, everyone wants in.”
Meanwhile in Melbourne, house prices grew fastest this year in $1 million-plus suburbs such as West Melbourne (up 8%) and Parkville, Clayton and Huntingdale (up 5%).
This three-bedroom terrace in Parkville in inner Melbourne sold for $1.95 million in March. Picture: realestate.com.au/sold
Queensland suburbs topped the charts for unit price growth, particularly in regional areas.
Suburbs of Rockhampton such as Norman Gardens (up 22%), Berserker (up 18%) and Allenstown (up 16%) were among the fastest growing suburbs in Australia for unit prices.
Rockhampton real estate agent Elise Carrick of The Agency said local owner-occupiers had become more active this year and were targeting more affordable properties such as units after strong competition from investors last year pushed up prices for freestanding houses.
“A lot of the locals weren’t able to purchase at the time or didn’t want to because of how much the prices had surged,” she said.
“Now they’ve swallowed the hard pill that prices are what they are, and to get a roof over their head they’ll have to pay what the sellers want.”
Other regional towns with strong unit price growth included Chinchilla (up 20%) and Warwick (up 17%) in Queensland, Murwillumbah in northern NSW (up 16%) and Dunsborough, near Busselton in WA (up 14%).
The suburbs with the most buyer demand
Data tracking enquiries per listing on realestate.com.au can reveal the areas that are most in-demand with buyers, with properties in many sought-after suburbs receiving an average of more than 100 enquiries.
Many of the nation’s top-ranked suburbs for enquiries per listing for houses were relatively affordable, including Werrington and St Marys in Sydney’s west and Rocklea in Brisbane’s south.
At the state level, all of Queensland’s top suburbs for enquiries were in Brisbane’s more affordable southern and western regions, and all except Forestdale had median house values under $1 million.
Suburbs in these regions also had strong enquiry levels for units, including Goodna where a typical unit receives 113 enquiries, and Loganlea where units receive 95 enquiries on average.
Some of the most in-demand suburbs were found in affordable regions of the capitals, including St Marys in western Sydney where this four-bedroom home recently sold for just over $1 million. Picture: realestate.com.au/sold
Most of Victoria’s most in-demand suburbs were in Melbourne’s north west, and the majority had median house values below $700,000 including Dallas, Broadmeadows and Coolaroo.
However, the situation was a little different in other states. The most in-demand Western Australian and South Australian suburbs were mostly found in inner Perth and inner Adelaide, and tended to be higher priced, including St Peters and Vale Park in Adelaide and Shenton Park and Floreat in Perth.
Pricier properties are in high demand in Perth’s Shenton Park, where this recently completed home just sold for $2.4 million. Picture: realestate.com.au/sold
In Sydney, apart from a few affordable hotspots, most of the other highly-ranked suburbs for demand had multimillion-dollar median values, including Coogee, Rose Bay and North Sydney.
Properties for sale in Bellevue Hill, where the median house value is more than $10 million, received an average of 122 enquiries, suggesting strong demand for high-end real estate.
Eastern suburbs real estate agent and TRG director Oliver Lavers said interest rate cuts had created more confidence in the high-end market, but inspections weren’t always translating to purchases.
Houses in Bellevue Hill are among the most in-demand in the nation, despite their multi-million dollar price tags. Picture: realestate.com.au/sold
“We are definitely still seeing a high volume of buyers coming through, however not the highest amount of buyers committing to purchasing,” he said.
“If the property is flawless with an ideal layout or in a premium location and priced attractively, then there is going to be multiple buyers bidding for the property.”
Pricey regions such as Sydney’s eastern suburbs were sought-after in the unit market, with listings in Tamarama, Double Bay and Bronte all receiving more than 90 enquiries on average.
Units in Tamarama in Sydney’s east are among the most sought-after in the nation. Picture: realestate.com.au/sold
Mr Moore said rate cuts were easing affordability constraints, which allowed some buyers to look at areas that may have previously been outside their budget.
“It’s plausible that with two rate cuts under our belt and probably three more expected, that’s going to help ease mortgage serviceability and affordability a bit,” he said.
“That will help make some of those more expensive areas obtainable for some buyers.”
The suburbs where homes are selling quickest
Tracking how long properties take to sell can reveal where homes are selling quicker – a sign that demand is intensifying and property prices could rise further.
Many of the fastest-selling suburbs in Australia for both houses and units were located in Adelaide, with properties snapped up in as little as two weeks, which Mr Moore said was a symptom of the city’s supply and demand imbalance.
“Adelaide has seen a big fall in how long homes of all types are selling, with high demand and more limited stock than has been typical, so homes have been selling quickly,” he said.
Roseworthy in Adelaide’s outer north was the fastest-selling suburb for houses at 14 days, while units were snapped up even faster in Garbutt, a suburb of Townsville in Queensland, selling in 13 days.
Houses in Port Willunga in Adelaide’s south typically sold within 16 days. Picture: realestate.com.au/sold
Houses in suburbs of Melbourne’s outer east, such as Kilsyth South and Belgrave Heights were among the fastest to sell in the nation, selling in a little over two weeks.
By comparison, the national median time to sell a house is 37 days while units typically sell in 35 days, although properties tend to sell quicker in Sydney, Melbourne, Brisbane and Adelaide.
In NSW, houses sold fastest in suburbs of Newcastle, such as Beresfield and Cardiff South, and Wollongong, such as Mount Saint Thomas and Avondale, as well as several outer Sydney suburbs such as Airds and Engadine, indicating demand remained strong for many hotspots of affordability.
Units in freshwater are among the fastest to sell in NSW. Picture: realestate.com.au/sold
But the Sydney suburbs where units sold quickest were mostly in pricier parts of the city, including the northern beaches suburbs of Balgowlah and Freshwater, as well as Bronte and Clovelly in the eastern suburbs.
Mr Moore said units could potentially experience stronger demand at times when houses were unaffordable for many people.
“If you want to live in those expensive areas but affordability is biting, historically that’s made more-affordable homes like units more attractive,” he said.
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