Affordable and premium suburbs both drive strong price gains in Australia’s housing market

Australia’s housing market is witnessing a significant shift in buyer activity this year, with both affordable hotspots and high-end suburbs experiencing robust price growth. This trend is largely attributed to interest rate cuts, which have enhanced borrowing power and boosted purchasing confidence, according to the latest data from PropTrack.

The PropTrack Home Price Index revealed a national home price increase of 0.4% in June, marking the sixth consecutive month of growth. This uptrend is evident across all capital cities, with Sydney and Melbourne now contributing to national gains after a sluggish start to the year. Angus Moore, REA Group’s executive manager of economics, noted the changing dynamics in the market. “The last few years have really been kind of two markets where Sydney and Melbourne were not growing particularly quickly… while Adelaide, Perth, and Brisbane were growing extremely quickly,” he explained. “Over the first six months of this year, we’re seeing a fairly similar pace of growth across all those cities.”

The convergence in growth rates signifies a shift from the two-speed market of 2023. “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,” Moore added.

Investors target rising regional markets

Smaller regional markets have emerged as some of the fastest-growing suburbs in 2024, driven by affordable entry points and strong rental yields that attract investors. Rangeway, near Geraldton in Western Australia, led the nation with a 19% rise in median house value to $334,000 over six months. Other Geraldton suburbs like Spalding, Beachlands, and Mount Tarcoola also saw rapid growth, with increases of 13%, 12%, and 12%, respectively.

In Victoria, investor interest has pushed up prices in Mildura, Merbein, and Red Cliffs, all rising by 6% in six months. Mark Thornton, principal at One Agency Mildura, commented, “For winter, it’s hot. Naturally, when you have a growing market, everyone wants in.”

Outer suburbs boom with new builds

Sydney’s outer south-west is experiencing a housing boom, with Menangle recording a 16% jump in median house value to approximately $1.2 million, driven by new housing estates. Similar growth was observed in Claymore and Austral, with increases of 12% and 11%, respectively. Moore highlighted the impact of affordability constraints, saying, “Mortgages have been very costly, affordability has been a real constraint for buyers which has to some extent favoured more affordable areas.”

High-end suburbs bounce back

Inner-city premium suburbs are also recording solid price growth. In Sydney, Surry Hills and Darlinghurst saw increases of 11% and 9%, respectively. Melbourne’s West Melbourne, Parkville, Clayton, and Huntingdale experienced growth of up to 8%. Moore noted the potential impact of falling interest rates on these areas: “As rates start to fall, we might see more expensive areas start to perform a little better. 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.”

Regional unit markets top growth charts

Queensland has dominated unit price growth, with Norman Gardens, Berserker, and Allenstown in Rockhampton experiencing increases of 22%, 18%, and 16%, respectively. Chinchilla and Warwick also saw significant growth, with unit prices rising by 20% and 17%. In New South Wales, Murwillumbah recorded a 16% increase, while Dunsborough in Western Australia saw a 14% rise. Elise Carrick of The Agency Rockhampton observed, “A lot of the locals weren’t able to purchase at the time… now they’ve swallowed the hard pill that prices are what they are.”

Buyer demand surges in both affordable and elite suburbs

PropTrack data also tracked enquiries per listing to identify the suburbs in highest demand. Affordable hotspots led in many states, such as Werrington and St Marys in western Sydney, and Dallas, Broadmeadows, and Coolaroo in Melbourne’s northwest. In Brisbane’s south, Goodna and Loganlea saw high demand for units. Premium suburbs also ranked highly, with Sydney’s Coogee, Rose Bay, and North Sydney attracting significant interest. Bellevue Hill, with a median value over $10 million, averaged 122 enquiries per listing.

“We are definitely still seeing a high volume of buyers coming through, however not the highest amount of buyers committing to purchasing,” said TRG director Oliver Lavers. “If the property is flawless… and priced attractively, then there is going to be multiple buyers bidding for the property.”

Moore suggested that recent rate cuts, along with the prospect of more to come, could help ease affordability pressures and make higher-priced suburbs more accessible to buyers. The Reserve Bank is expected to cut the official cash rate by 25 basis points in August, bringing it to 3.6%, with a further cut anticipated in the fourth quarter.

Fastest-selling suburbs point to rising demand

Properties are selling faster in certain areas, often a sign of tight supply and strong demand. Roseworthy in Adelaide was the fastest-selling suburb for houses at 14 days, while Garbutt in Townsville led for units at 13 days. In Melbourne’s outer east, Kilsyth South and Belgrave Heights also sold quickly. In New South Wales, quick sales were seen in Beresfield and Cardiff South (Newcastle), Mount Saint Thomas and Avondale (Wollongong), and Airds and Engadine (outer Sydney). For units, Balgowlah, Freshwater, Bronte, and Clovelly— all in Sydney’s eastern and northern beaches—topped the list.

“Adelaide has seen a big fall in how long homes of all types are selling… so homes have been selling quickly,” Moore noted. “If you want to live in those expensive areas but affordability is biting… more-affordable homes like units become more attractive.”