The suburbs where home values are still increasing

On a whole Australian property prices are falling, but there are some pockets where house values are actually still rising.

In fact, PropTrack data analysing median property values by suburb shows the value in some postcodes has increased by more than 20% in the past three months.

In an interview with us, PropTrack economist Angus Moore said the data shows there’s a disparate performance across difference parts of the country driven by who wants to buy, and what’s available to purchase.

“What this shows is when we talk about property markets being down 3.4% nationally, there’s a huge disparity sitting underneath that, it’s not like every home is falling 3.4%,” Mr Moore added.

“We’re seeing some cities outperform others.

“Brisbane and Adelaide are holding up better than Melbourne and Sydney, but even within places like Melbourne and Sydney, we’re seeing outer suburbs do better than inner city suburbs, for instance.”

And it’s the outer suburbs where values tend to be increasing, according to the PropTrack data.

The estimated value of units in Rouse Hill, Sydney, increased 24.08% in the September quarter. The value of houses in Lewiston, Adelaide grew 23.99%, Russell Island off the Brisbane coast was up 21.41% and Mount Helena in Perth’s hills was up 20.96%.

Top 10 metropolitan postcodes:

1. Rouse Hill, NSW (units): +24.08%

2. Lewiston, SA (houses): +23.99%

3. Russell Island, QLD (houses): +21.41%

4. Mount Helena, WA (houses): +20.96%

5. Stoneville, WA (houses): +19.63%

6. Kingston Beach, Tas (houses): +19.06%

7. Margate, Tas (houses): +18.80%

8. Quakers Hill, NSW (units): +17.98%

9. Bullsbrook, WA (houses): +17.74%

10. Springwood, QLD (units): +17.0%

Source: PropTrack

Why values are rising in some outer suburbs

With interest rates increasing, the borrowing capacity of buyers is decreasing. For some that means readjusting their expectations on where they can buy.

The official cash rate has jumped from 0.1% to 2.6% since May and PropTrack estimates that’s wiped 21.6% off the maximum borrowing capacity of a typical buyer.

In real terms, a buyer who could have borrowed up to $750,000 in April might only be approved for $587,944 today.

For many that will mean buying further from the CBD than initially intended. For others it could mean buying smaller properties.

That’s reflected in the PropTrack data, with values rising for units in the more populated areas compared to houses in the lesser populated postcodes.

“We’re expecting to see over the next year or two that units might outperform houses, which wasn’t the case during the pandemic,” Mr Moore said.

“What that means is that units are relatively quite cheap compared to houses now and in an environment of constrained affordability we might see some buyers substituting into units and that might provide a boost to prices there.”

Rouse Hill real estate agent Shad McMillan says he hasn’t seen too much of an increase in the value of sold units, but he says interest in the area has certainly ramped up lately.

“There was definitely a change that came through probably mid September, where I found our open home numbers increased dramatically, our buyer demand increased our inquiries increased,” Mr McMillan told us.

Mr McMillan believes the continuation of working from home arrangements in a post-lockdown era is still contributing to the popularity of outer suburbs and regional areas, but interest rates seem to be driving the Rouse Hill demand right now.

“I think the main contributing factor is people have adjusted their budgets to cater for the interest rates,” Mr McMillan said.

“People are finding that being the entry level to the hills they get good value property compared to the more expensive suburbs in the Hills.”

The great postcode disparity

While some postcodes are simply outperforming the national average because they’re more affordable, others can only be explained by a set of circumstances unique to the area.

For some regional areas the shortage of rental properties could still be impacting the value of homeownership.

Broome-based real estate agent Andrew Blackley believes that’s certainly the case in Cable Beach, where PropTrack data shows the estimate value of units is up more than 22%.

“We’ve got a really tight rental market at present so it’s sort of forcing tenants to, for security to get a roof over their head, look at purchasing,” Mr Blackley said.

“Rents are going going through the roof as well because there’s such a shortage of rentals.

“So it is actually, in some cases, it’s cheaper for the person to buy a place and have a mortgage rather than be paying rent because… there’s a lot over $1000 a week.”

Mr Blackley says so far property values in the town are sheltered from the impact of interest rate increases.

“I think it’s a different kettle of fish here,” he said.

“It does have an impact on some people, but there’s a bit of industry that’s going to be happening around Broome itself as well so there’s a big demand for property, people are still moving here.

“It’s sort of driving prices up in the housing market as well.”

Top 10 regional postcodes:

1. Cleve, SA (houses): +24.14%

2. South Carnarvon, WA (houses): +22.92%

3. Hopetoun, WA (houses): +22.52%

4. Cable Beach, WA (units): +22.02%

5. Moora, WA (houses): +20.51%

6. Pialba, QLD (units): +20.47%

7. Kalbarri, WA (houses): +20.28%

8. Hamilton, Vic (units): +20.13%

9. Mount Buller, Vic (units): +19.74%

10. Gympie, QLD (units): +19.68%