Hundreds of suburbs return to boom conditions as surging home values defy expectations

Home values have risen in the vast majority of Australian suburbs this year, with buyers and sellers returning to the market as confidence improves and interest rates stabilise.

The remarkable turnaround has come despite dire predictions a year ago that prices would continue falling in 2023.

Instead, the opposite has occurred, with Australia’s median home value climbing every month this year to reach a record high in September.

Prices are up about 4.3% nationally this year, but strong demand amid a limited supply of properties on the market has caused much faster price growth in some areas.

Data from PropTrack’s automated valuation model (AVM) shows values have increased by more than 10% this year in almost 500 suburbs, most of which are in Sydney, Brisbane, Adelaide and Perth.

PropTrack senior economist Eleanor Creagh said the subdued listings environment earlier this year was one driver of the turnaround in home prices, but stronger demand underpinned by record levels of migration was also pushing prices higher.

“In Sydney, a strong rebound in population growth with higher numbers of net overseas arrivals is likely to have bolstered demand for housing,” she said.

“Meanwhile, Perth, Adelaide and southeast Queensland regions have likely been buoyed by their relative affordability, population growth and interstate migration.”

Elevated demand pushes up values in affordable areas

In a handful of suburbs, median values increased by more than 20%, and despite such strong growth, affordability is the common theme among the nation’s top performers.

Of Australia’s top 10 suburbs by price growth for both units and houses, most have a median value less than $500,000.

Affordability has been a key factor driving price growth this year, Ms Creagh said, with higher interest rate rises prompting buyers to look for homes in areas where property prices are cheaper.

“The lower end of the market held up better through the downturn and is also in demand as home prices have recovered,” she said.

“As interest rates are higher, people’s borrowing power has dropped, shrinking some buyers’ budgets, meaning regions that remain comparatively affordable are in demand.”

The suburb with the fastest house price growth in Australia was Riverview, east of Ipswich in Queensland. Its median house value rose by almost 24% this year to about $446,000.

First-home buyers were drawn to the suburb for its affordability, said real estate agent Mitch Edwards of Ipswich Real Estate, as it offered better value than other parts of Ipswich or Brisbane.

“That corridor of Ipswich towards Brisbane is going crazy,” he said. “The recent ones that I’ve sold all went to first home buyers, except one that went to an investor.”

Interest rate rises had caused more first-home buyers to search in affordable suburbs, Mr Edwards said.

“It might have pushed someone from a $500,000 to $550,000 bracket down to a $400,000 to $450,000 bracket.”

Six of Australia’s top 10 suburbs for house price growth this year are in Perth’s south east, including Armadale, Gosnells and Seville Grove.

Despite a 20% jump this year, median house values range between about $400,000 and $500,000 in these suburbs, with the region’s affordability attracting a huge influx of east coast investors or buyer’s agents purchasing on their behalf, according to real estate agent Ben Mathews of The Agency Perth.

“The investor demand has been high for a year and I’d say it’s been a real frenzy for probably three to six months,” he said.

“We’re seeing 10 times as many buyers as there were. You put a listing up and you’ve got offers 20-30% above asking price within a few hours.”

“Eight out of 10 houses are going to investors, but it used to be the other way around. The rental yield is good and the price point is still affordable. There’s a lot of tenant demand as well, because there’s minimal stock on the market.”

Source: realestate.com.au