The new normal: Where $1 million-plus suburbs are booming

Million-dollar house prices are becoming the new normal among the nation’s fastest growing suburbs, as rising property values leave buyers with fewer affordable options.

About half of the top 30 capital city suburbs for house price growth in the past year had median prices of $1 million or more, the latest PropTrack data shows.

It’s a shift in the trend seen over recent years, when suburbs with the strongest price growth in percentage terms fell toward the more affordable end of the market. For several years, most of the suburbs with the fastest house price growth were priced around the $500,000 mark.

With prices having risen strongly in more affordable suburbs, growth has slowed a little and some hot suburbs come off the boil, with pricier areas taking their place on the leaderboard.

The change in the top-performing suburbs comes after a series of interest rate cuts from the Reserve Bank throughout this year, with the cash rate falling to 3.6% – the lowest it’s been since April 2023.

Rising interest rates from 2022 onwards pushed buyers towards more affordable markets, with outer suburbs of Perth, Adelaide and Brisbane recording the strongest growth among the capitals as first-home buyers and investors competed for less-expensive properties.

But with this year’s interest rate cuts increasing buyers’ borrowing power and underpinning home price growth across Australia, the housing upswing has broadened, and the latest data shows higher-value suburbs are now topping the charts.

The capital city suburbs where house prices rose the fastest

The top 30 capital city suburbs for house price growth were split among Adelaide, Perth and Brisbane, while only one Sydney suburb made the list.

The beachside suburb of Semaphore in Adelaide’s west was the number one capital city suburb for house price growth in the past year, with prices rising 39% to $1.185 million.

It rounded out an all-Adelaide top three, which included Marden in the inner north east and another beachside suburb, Somerton Park, in the south west.

REA Group executive manager of economics Angus Moore said interest rate reductions could be encouraging some homeowners to upgrade, especially in cities where home values have surged in recent years.

“With rates starting to come down, affordability is beginning to improve a bit,” he said.

“On top of that, many buyers in smaller capitals are sitting on significant equity, with prices having nearly doubled over the past five and half years.”

“That combination might be driving upgrader demand in some of these more expensive areas.”

Upgraders head to desirable lifestyle suburbs

Real estate agent and Noakes Nickolas director Simon Noakes said lifestyle-oriented suburbs such as Somerton Park were firmly on the radar of upgrading homebuyers seeking a home near the coast.

“It’s just gone from strength to strength,” he said. “It’s become a really family-orientated area – it’s quiet with beautiful streets, and the beaches in Somerton Park would be up there with the best in Australia.”

“Plus the proximity to the city and the ability to get a full-sized block makes it a pretty desirable area.”

Mr Noakes said Adelaide’s strong price growth in recent years, combined with recent rate cuts, had allowed more homeowners to upgrade into pricier suburbs.

“There’s been a bit of movement with people building up so much equity in their property since Covid,” he said. “That’s given them choices and options.”

The list of top-performers included several pricier Perth suburbs, including Trigg, West Leederville and Bicton.

Real estate agent Craig Gaspar of Duet Property Group said buyers in West Leederville were mostly upgrading families.

“The location is so central,” he said. “We’re seven minutes from the city and seven minutes to the beach. You can walk to a train and we’re surrounded by very good public schools.”

The suburb was quite tightly-held, he said, with the supply and demand imbalance driving prices higher.

“Vendor expectations have now gone to a different level,” he said. “I don’t see the stock situation changing for a very long time, so there’s still going to be that pressure on pricing.”

Affordability still a priority for many buyers

There were still plenty of more-affordable areas in the top 30 suburbs ranked by house price growth, particularly in the Ipswich region, about 40km west of the Brisbane CBD.

Ipswich real estate agent Josie Smith of Century 21 said the region’s affordable home prices attracted buyers priced out of inner Brisbane suburbs.

“People come out this way for the lifestyle as well,” she said. “A lot of Ipswich suburbs still offer lower density living.” 

“Ipswich has a predominately younger demographic. There are a lot of younger families and first-home buyers moving here.”

“There’s a lot more planned infrastructure to come for the region and that puts us on the map for job growth as well.”

Other more-affordable suburbs, such as Elizabeth North in Adelaide and Bullsbrook in Perth’s outer north recorded rapid growth in the past year

Outer suburbs of Perth, Adelaide and Brisbane where homes can be purchased for between $500,000 and $750,000 have been in high demand among both first-home buyers and out-of-area investors in recent years.

However, there are indications that some investors may be shifting focus to other markets such as Darwin, Albury and Mildura.

The expansion of the federal government’s First Home Guarantee scheme could further influence where first-home buyers look for homes, with higher price caps unlocking more capital city suburbs for first-home buyers.

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