The biggest trend currently evident across Australia is that buyers increasingly are chasing affordability.
In most of our capital cities, it’s the affordable suburbs where buyer demand continues to be strongest.
And, at the same time, investors continue to buy in affordable regional locations that offer higher yields to compensate for rising interest rates.
Our quarterly analysis of sales activity for The Price Predictor Index shows there are still many supercharged suburbs and towns with increasing numbers of dwelling sales which will most likely to deliver future price growth – and the majority of these are affordable suburbs.
Within capital cities, buyers are chasing affordability in a variety of ways.
In Brisbane, for example, the market overall dropped from early in 2022, but the cheaper outer ring areas such as Logan City and Ipswich City continue to experience high demand.
Within Melbourne it’s the more affordable local government areas of Hume, Whittlesea, Melton and Wyndham that buyers have in their sights.
While Perth and Adelaide are still chalking up strong sales activity overall, it’s the suburbs which offer price points attractive to first home buyers and investors that are leading the way.
Perth affordable suburbs such as the Local Government Areas of Gosnells, Armadale, Rockingham, Kwinana and Wanneroo – and Adelaide’s north including the Salisbury and Playford LGAs – offer investors low prices and higher yields.
When you can buy in a capital city in the $300,000s and get yields above 6% in locations with growth prospects, it’s an attractive equation for property investors.
Another trend emerging in the quest for affordability is an increase in sales of apartments, particularly in suburbs where the price differential is significant compared with houses.
In Sydney buyers are securing affordable units in the Inner West, Canterbury-Bankstown and Parramatta areas – which allow buyers to secure properties close to the action at prices significantly below Sydney median house price of $1.22 million – in many cases at prices half that level.
Melbourne’s inner city unit markets are in demand and it’s the same in Brisbane.
In addition to low prices, investors are looking to these locations to secure properties with higher yields to help buffer additional costs through interest rate rises.
The top capital city market with affordable prices and above average rental returns is Darwin, which has the highest median yields of the capital cities of 7% for units and close to 6% for houses.
There are also a number of regional markets which continue to offer investors low prices, good rental returns and solid prospects for capital growth.
These include Tamworth in regional NSW, Murray Bridge in South Australia and Toowoomba, Rockhampton and Townsville in regional Queensland.
Our latest Cheapies with Prospects reports feature 10 locations that meet the criteria for affordability and future growth.