Tight supply, rising interest rates, and reduced borrowing capacity dampened Australia’s property market in 2022, with prices falling from their pandemic-induced peaks.
Prospective sellers have been sitting on the sidelines, delaying decisions to see how high inflation and rising interest rates will affect the market.
But Domain’s latest house price report shows that while property prices have continued to fall, they’re still significantly higher than pre-pandemic… and in some prize suburbs, price growth has been outstanding.
For example, house prices across the combined capitals have fallen 6.1% from the March 2022 price peak, down about $66,000, and back to late 2021 pricing.
But this is still 25.4% higher (about $204,000) than in mid-2020.
Some of the biggest price falls have been in the areas where house prices surged, which is unsurprising given these suburbs often lead the downturn.
But there are pockets of premium areas in New South Wales, Victoria, and Queensland which have remained resilient, and even grown over the past year.
Most sought-after NSW suburbs
Sydney’s house prices have fallen faster than in any other city (-10.9 year-on-year), but there are some suburbs defying the trend, having experienced significant gains over the past year.
Domain’s latest house price report shows that some of the city’s houses have risen in value by as much as 18.8% over 2022.
But the price growth suburbs aren’t restricted just to city suburbs - some regional areas have also jumped in value.
Bowral, in regional NSW to the south of Sydney, has seen its house prices jump an impressive 26.9% over the 12 months to December 2022 to reach a new median of $1.65 million.
Kingscliff and Burradoo also saw price increases of 10.1% and 21.3% over the year.
In Sydney, the strongest growth suburbs are located in the eastern suburbs, the lower north shore, the upper north shore, and also in Sydney’s south.
The sought-after beachside suburbs of Cronulla has seen its house prices rise 18.8% over the year to a new median of $3.05 million.
Blakehurst, also in Sydney’s south has seen a 17.2% rise in house prices.
The affluent eastern suburbs have also seen a jump in their median house prices - Vaucluse, Rose Bay, and Woollahra have seen impressive annual gains, of 12.9%, 8.3%, and 6.2% respectively.
Most sought-after VIC suburbs
House prices in Victoria’s capital have also fallen significantly, by 5.6% year-on-year.
But despite Melbourne’s losses, there are a handful of suburbs bucking the trend, having performed strongly over the course of 2022.
Barwon Heads, on the Bellarine Peninsula, had the most significant increase across the state, posting a 15.2% increase in its median house price, to $1.8 million.
Elwood in inner urban Melbourne and Park Orchards in the inner east of the city both also had a double-digit price increase of 11.7% and 10.4% respectively over the year.
Victoria’s remaining suburbs to make the most in-demand list are spread across the city.
Camberwell, Hawthorn East, Albert Park, Blairgowrie, and Brighton are all in demand from property buyers.
Local agents told Domain that the key driver of price increases in many of these suburbs is a lack of supply with houses tightly held by their owners.
Most sought-after QLD suburbs
Brisbane's housing market skyrocketed during the pandemic with 42.7% trough-to-peak growth.
Of all the capitals, Brisbane has had the sharpest reduction from its house price peak, along with Sydney and Canberra.
But because house prices skyrocketed a huge 34.4% during the pandemic property boom, annual prices have managed to fall just 1.1% over the course of 2022.
And thanks to the sea- and tree-change trend, which saw many Australians flock north in search of more affordable property amid lifestyle suburbs, Queensland’s premium suburbs are also spread across the Gold and Sunshine coasts.
And some of these postcodes have seen huge annual returns.
It’s unsurprising then that the list of price-growth suburbs for our northeastern state is extensive.
House prices in Bulimba, in Brisbane’s inner east, are up 36.2%, while old-money suburbs like Hamilton and Ascot and the neighbouring suburb of Clayfield are up significantly - by 32.8%, 29%, and 28.6% respectively.
The premium riverfront enclave of Chelmer in Brisbane’s west rose by a huge 27.4% over 2022.
A number of the Gold Coast’s most popular suburbs also recorded impressive growth in 2022, including Clear Island Waters, Bundall, Paradise Point, and Broadbeach Waters.
In fact, Clear Island waters had the largest annual property price increase across the state - with a 36.2% increase.
The Sunshine Coast suburbs Noosa Heads and Doonan also made the list of suburbs with impressive growth - at 25.4% and 16.4% respectively.
The data fits in with our on-the-ground experience at Metropole Brisbane where there is still strong demand from both home buyers and property investors for A-grade homes and investment-grade properties.
Location, location, location… and investment grade
While the sought-after suburbs might make for a tempting investment, they aren’t necessarily the suburbs I would recommend investing in.
At Metropole, we always advise on the importance of investment-grade properties and locations, rather than chasing a hotspot or growth area.
That’s areas and properties which hold their value over the long term, rather than benefit from an uptick in demand.
But even before looking for the right location, make sure you have a Strategic Property Plan to steer you through the upcoming challenging times our property markets will encounter.
Because aside from remembering that you should focus your efforts on investment-grade properties and locations, you also need to remember that property investing is a process, not an event.
That means that things have to be done in the right order – and selecting the location and the right property in that location comes right at the end of the process.
And that’s because what makes a great investment property for me, is not likely to be the same as what would suit your investment needs.
