Property prices have surged faster than the annual household wage in these suburbs

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The coronavirus outbreak and continued lockdowns and restrictions have done little to dampen Australia’s property market.

Price Growth

Recent Domain data shows that property prices have reached record highs across all capital cities as the perfect storm for Australia’s property market continues to roll out.

Australia’s national median house price has climbed exceptionally close to the million-dollar mark at $955,927 – which is a huge 18.8% increase over the year, or 5.8% over the June quarter

And while units might be seen as a more affordable option for many trying to buy a home, they too have seen surges in prices nationwide.

The national unit price has risen 6.7% over the year, or 2.1% over the past quarter to a new median of $601,482.

And it’s all happening amid low-wage growth.

Suburbia District

But what is particularly interesting, then, is that there are price increases, for houses and units, in some Australian suburbs which are even exceeding the annual household wage for that area over the past 12 months, according to a new Domain report.

For houses, NSW has been the standout performer, having the highest proportion of suburbs where annual house price gains are more than the annual household income.

This was followed by Tasmania, Victoria, ACT, Queensland, South Australia, and Western Australia.

The below table highlights that, while the majority of suburbs across the country experienced house price growth over the last year, there’s a big portion across the states where the annual household income is higher than the annual house price increase.

NSW was the only state to have proportionately more suburbs exceeding the household income than below:

Chart00

Meanwhile, fewer suburban median unit prices increased more than the annual household income which reflects the underperformance of units versus national house prices over the past year.

Queensland had the highest proportion of units that gained more in price growth than the annual household income, followed by NSW, Victoria, and the ACT.

Proportion of suburbs where unit price increases were higher or lower than household income
State
Higher than household income Lower than household income
Qld 13% 56%
NSW 12% 57%
Vic 7% 54%
ACT 4% 68%
*SA, Tas, WA and NT are excluded from the state breakdown due to the low transaction volumes providing few suburban medians. Rounded to the nearest percentage, this may lead to some rows not precisely summing to 100% due to the decimals.

Data provided by domain

Top 20 suburbs where house price increases have surpassed average wages

The top 20 suburbs where house prices have grown more than the average annual salary are all in New South Wales and Victoria and are within the premium suburbs within cities and lifestyle coastal pockets.

“The constant presence and risks of lockdown, cheap interest rates, and changing property preferences amid the shift to working from home have defined the property landscape over the past year and a half,” Domain says in the report.

“The premium-priced markets have led the way in house price growth causing the biggest gap between annual house price growth and annual wages.

“It’s clear there is a strong demand for space in our cities and lifestyle regions.”

Now that more and more Aussies are working from home on a more permanent basis, on top of the 20-minute neighbourhood, they’re also looking for properties that have more space or a dedicated area or room to allow them to continue working from home.

And this is another trend I’ve also been tracking — the demand for larger homes.

Small Disctrict

It has also driven demand for lifestyle properties in sought-after locations like near the beach.

Remember the 20-minute neighbourhood!

Of the top 20 list, NSW suburbs easily dominate, being home to 18 suburbs of the list which are spread across areas in the city, the east, Northern Beaches, North Shore, and Byron Bay.

Dover Heights and Bronte, both in Sydney’s eastern suburbs, take the top 2 spots on the list as the suburbs where house prices have risen faster than the average annual wage for residents in the area.

Rental PriceIn these 2 suburbs, the difference between the increase in house prices and annual household income surpassed a whopping $1 million meaning they had an annual house price increase just over 7 times and almost 8 times the annual household income, respectively.

Northbridge, Seaforth, and Mosman make up the remainder of the top 5 spots.

Meanwhile, the Victorian suburbs of Somers and Blairgowrie, both on the Mornington Peninsula account for the remaining 2 suburbs on the list which aren’t in NSW.

In total 13 suburbs saw house price growth more than 5 times the annual household income, and all are in the top 20:

Top 20 Suburbs where annual house price growth exceeded household income, by dollar difference

State
Suburb Postcode Region Annual change in house price Estimated annual household income How much more your home increased compared to your income.
NSW Dover Heights 2030 City and East $1,265,000 $174,491 $1,090,509
NSW Bronte 2024 City and East $1,220,000 $153,767 $1,066,233
NSW Northbridge 2063 Lower North $1,050,000 $192,510 $857,490
NSW Seaforth 2092 Northern Beaches $925,000 $194,813 $730,187
NSW Mosman 2088 Lower North $875,000 $145,189 $729,811
NSW Bellevue Hill 2023 City and East $850,000 $166,489 $683,511
VIC Somers 3927 Mornington Peninsula $731,750 $85,175 $646,575
NSW Manly 2095 Northern Beaches $786,000 $140,986 $645,014
NSW Palm Beach 2108 Northern Beaches $762,500 $121,528 $640,972
NSW Byron Bay 2481 NSW Country $655,000 $68,910 $586,090
NSW Gordon 2072 Upper North Shore $600,000 $133,157 $466,843
NSW Killara 2071 Upper North Shore $612,500 $145,880 $466,620
NSW Naremburn 2065 Lower North $585,000 $151,234 $433,766
NSW Avalon Beach 2107 Northern Beaches $545,000 $123,025 $421,975
VIC Blairgowrie 3942 Mornington Peninsula $469,500 $61,502 $407,998
NSW Pymble 2073 Upper North Shore $576,500 $177,888 $398,612
NSW North Balgowlah 2093 Northern Beaches $565,000 $179,557 $385,443
NSW Bilgola Plateau 2107 Northern Beaches $520,000 $138,108 $381,892
NSW Maroubra 2035 City and East $479,400 $99,134 $380,266
NSW Cremorne 2090 Lower North $514,000 $135,172 $378,828

Data provided by domain

Top 20 suburbs where unit price increases have surpassed average wages

Unit price growth has continued to lag behind houses over the course of the Covid-19 pandemic but there are still suburbs that show consistent performance to homeowners where the annual unit price increase has far exceeded annual household income.

The Aspirational SuburbsThe top 20 performing suburbs for units are scattered across Australia, but NSW dominates the list with 12 suburbs, followed by Queensland with 6 suburbs and Victoria with 2 suburbs.

In NSW, most of the suburbs are within the northern suburbs and inner east of Sydney.

Queensland suburbs that made the list are all located on the Sunshine Coast.

Meanwhile, in Victoria, the suburbs of Blackburn and Geelong continue to show strong annual unit returns compared to annual household income.

Prices RisingMilsons Point in Sydney took the first spot with an extravagant $508,500 average price increase for its units over the past 12 months.

The increase more than doubles the average annual household income for the area – $178,867.

Little Bay, Fairlight, and Darling Point, all in NSW, also made the top of the list.

Queensland’s Sunshine Beach was the only suburb outside of NSW in the top 5, coming in fourth place with a $212,500 hike in unit prices versus an estimated average annual income of $77,067.

Top 20 Suburbs where unit prices exceeded household income, by dollar difference

State
Suburb Postcode Region Annual change in unit price Estimated annual household income How much more your home increased compared to your income
NSW Milsons Point 2061 Lower North $508,500 $178,867 $329,633
NSW Little Bay 2036 City and East $351,500 $117,498 $234,002
NSW Fairlight 2094 Northern Beaches $299,000 $150,831 $148,169
QLD Sunshine Beach 4567 Sunshine Coast $212,500 $77,067 $135,433
NSW Darling Point 2027 City and East $295,000 $170,749 $124,251
NSW Rose Bay 2029 City and East $250,000 $130,797 $119,203
NSW Double Bay 2028 City and East $260,000 $142,656 $117,344
NSW Woolloomooloo 2011 City and East $213,000 $103,279 $109,721
QLD Coolum Beach 4573 Sunshine Coast $181,000 $72,984 $108,016
NSW Kingscliff 2487 NSW Country $176,000 $70,810 $105,190
NSW Terrigal 2260 Central Coast $200,000 $96,658 $103,342
NSW Queenscliff 2096 Northern Beaches $233,500 $135,172 $98,328
NSW Yamba 2464 NSW Country $146,250 $50,258 $95,992
NSW Narrabeen 2101 Northern Beaches $181,500 $91,074 $90,426
VIC Blackburn 3130 Outer East $194,300 $104,380 $89,920
VIC Geelong 3220 Geelong $162,500 $82,796 $79,704
QLD Noosaville 4566 Sunshine Coast $132,000 $66,255 $65,745
QLD Buddina 4575 Sunshine Coast $145,000 $79,540 $65,460
QLD Golden Beach 4551 Sunshine Coast $108,000 $58,145 $49,855
QLD Mooloolaba 4557 Sunshine Coast $118,000 $68,555 $49,445

Data provided by domain

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About

Kate Forbes is a National Director Property Strategy at Metropole. She has 15 years of investment experience in financial markets in two continents, is qualified in multiple disciplines and is also a chartered financial analyst (CFA).
Visit Metropole Melbourne


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