In the wake of Australia’s recent property boom, price-conscious house hunters are setting their sights on underperforming suburbs, sparking increased demand for homes in neighborhoods that offer relative affordability, analysis of PropTrack data showed.
The PropTrack analysis indicated that properties for sale in suburbs where home values have fallen behind the national average are attracting numerous enquiries, suggesting a potential upturn in these areas.
The study, which measures key enquiries per listing on realestate.com.au, serves as an indicator of a suburb’s desirability among buyers.
Paul Ryan (pictured above), PropTrack’s chief economist, noted that enquiries represent a crucial component of demand, influencing property prices. The research employed PropTrack’s automated valuation model (AVM) to determine a suburb’s median property value.
Underperforming capital city suburbs with the strongest buyer demand
Source: PropTrack. Suburbs ranked by enquiries per listing. Includes suburbs with price growth less than the respective Greater Capital City Statistical Area (GCCSA) and a minimum of 30 listings in the 12 months to the end of November 2023.
Sought-after but underperforming suburbs present promising opportunities for buyers seeking undervalued properties that may appreciate in the future due to high demand.
The underachieving suburbs experiencing the highest demand exhibit a diverse range, with trends varying based on the region or city.
Kenthurst in Sydney’s northwest, despite a 7.3% decrease in median value over the 12 months to November, recorded the highest enquiries per listing, averaging 67 enquiries, indicative of strong demand.
Ben Jobberns, director of Guardian Realty Dural, attributed the likely cause of the decrease in Kenthurst’s median value to a “changing of the guard” in the semi-rural suburb.
Jobberns said that an influx of long-held properties had been sold over the past year, with older homeowners, who had remained in place during the pandemic, now downsizing or relocating.
He said these older homes had offered affordable opportunities for buyers, allowing them to acquire modest houses on large blocks for demolition and reconstruction. The buyers were mainly local upgraders seeking acreages on the urban fringe, close to the area’s well-regarded private schools.
Ryan said the underperformance of some of these suburbs might be attributed, in part, to their substantial price growth over the past few years as buyers sought larger properties during the pandemic period.
“Lifestyle regions have fallen in price because they saw such a big run-up,” he said.
Wamberal on the NSW Central Coast, with an average 55 enquiries per listing, experienced a 1.7% decline in home values over the past year, showcasing the potential for buyers seeking value.
In Brisbane, with a 9.4% growth in values over the past year, sought-after suburbs like Sheldon and Samford Valley attracted 58 inquiries per listing. However, their prices grew at a slower pace compared to the rest of the city, at 6% and 3.5%, respectively.
Meanwhile, in the Adelaide Hills, suburbs like Beaumont and Stirling were highly sought-after, experiencing solid price growth over the past year. Yet, Adelaide's overall median value outpaced these individual suburb increases.
Underperforming regional suburbs with the strongest buyer demand
Source: PropTrack. Suburbs ranked by enquiries per listing. Includes suburbs with price growth less than the respective Greater Capital City Statistical Area (GCCSA) and a minimum of 30 listings in the 12 months to the end of November 2023
Regional Australia saw underperforming suburbs favoured by tree changers, including Byron Bay and Jamberoo in NSW, Lorne in Victoria, and hinterland suburbs of the Gold Coast and Sunshine Coast in Queensland.
The underperformance, Ryan said, was a result of markets cooling after sustained strong price growth, and not due to falling demand.
Relative affordability isn't exclusive to tree-change destinations; other areas also witness heightened enquiry levels.
Family-friendly suburbs like Killara and Gordon in Sydney’s north and Yowie Bay and Sylvania Waters in the south experience high demand due to subdued price growth, providing opportunities for upgraders.
While these suburbs boast median values above $2 million, they are far from affordable. However, they provide prestigious homes at a more reasonable cost compared to the expensive suburbs in the city's east, which spearheaded the latest market upturn.
“Many of the traditional blue-chip suburbs have seen a lot of growth so people are starting to look further afield,” Ryan said.
In Perth, where house values surged by 13.3% over the past year, suburbs with underperforming house prices and strong demand have median prices well above the citywide median, indicating increased interest in pricier areas.
First-home buyers, dealing with strained budgets due to higher interest rates, are now turning to more affordable suburbs where prices haven't experienced significant increases, Ryan said. This trend is driving demand in lesser-known pockets of affordability.
“There would be a lot of first-home buyers that would be shifting their search further afield, particularly with higher interest rates and price growth,” the PropTrack economist said.
Among Melbourne suburbs where house prices lagged behind the city-wide growth, those experiencing the highest demand were affordably priced and situated towards the city’s fringe. This includes areas like Coolaroo, Hampton Park, and Melton.
“These are regions where prices haven't grown as much as Melbourne, and they have quite accessible price points,” Ryan said.
According to Ryan, the impact of affordability constraints on first-home buyer activity varies between Sydney and Melbourne, primarily due to Sydney’s higher property prices.
“Melbourne’s price points mean you’re still getting first-home buyers looking for houses on the periphery,” Ryan said. “For houses, first-home buyers are essentially priced out in Sydney, so if you are looking for property, you’re probably looking for a unit, and that's where it shows up in Sydney.”
Sydney suburbs such as Enfield, Carlingford, and Holroyd, with unit prices below $750,000, attract strong demand from first-home buyers.
Similarly, the majority of Brisbane suburbs, where unit prices didn’t keep pace but still exhibited robust demand, had median values ranging from $500,000 to $600,000. This affordability range remained within reach for first-home buyers, even with reduced borrowing capacities, PropTrack reported.
For more details, visit the realestate.com.au website.
Get the hottest and freshest mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
