John McGrath - Top growth suburbs reflect pandemic trends

When I reflect on the past 18 months of the pandemic, what really strikes me is the huge social shifts it has forced – and the big ones have played out right in front of us in the property market. 

 

CoreLogic has just released its FY21 suburb data, so this week we are revealing the top 5 growth suburbs in Sydney, Melbourne, Brisbane and Canberra as well as the top 5 in regional NSW, Victoria and Queensland.

 

What’s most interesting here is that almost all of this price growth is a direct result of pandemic trends.

 

The key trends are:

 

1. The inner city decentralisation, which is occurring because people can now work from home, and many are buying larger properties providing more space in affordable city outskirt areas
2. The regional relocation trend, which is also occurring because people can work from home and are buying larger properties, but there’s one more motivator – a major lifestyle change
3. The upgrading trend, which is primarily a result of the RBA lowering the cash rate and undertaking a QE program that enabled banks to offer super cheap finance. People are also funding their upgrades from billions of dollars in savings from not travelling and holidaying overseas
4. Strong first home buyer activity, powered by record low interest rates and massive government stimulus designed to support the construction industry

 

Let’s look at the top 5 growth suburbs in Sydney and regional NSW first.

 

Top 5 suburbs for house price growth – Sydney

1. Sylvania Waters (Sutherland Shire) up 70% to a median $2,800,000
2. Colebee (Blacktown LGA) up 64% to $900,000
3. Bardia (Campbelltown LGA) up 58% to $720,000
4. Catherine Field (Camden LGA) up 56% to $680,000
5. Burraneer (Sutherland Shire) up 43% to $2,720,000

 

Top 5 suburbs for house price growth – Regional NSW

1. Lightning Ridge (Walgett LGA) up 264% to a median $120,000
2. Copacabana (Central Coast LGA) up 70% to $1,490,000
3. Finley (Berrigan LGA) up 67% to $210,000
4. Kembla Grange (Wollongong LGA) up 65% to $575,000
5. Teralba (Lake Macquarie LGA) up 63% to $636,000

 

All of Sydney’s top 5 growth suburbs are in middle to outer ring areas, reflecting the decentralisation, upgrading for more space and first home buyer activity. 

 

Campbelltown and Camden LGAs are very popular with first home buyers looking for houses, as well as upgraders seeking large blocks of land and a peaceful, rural lifestyle.

 

Also in the top 5 are waterside lifestyle suburbs, Sylvania Waters and Burraneer, reflecting upgrader activity amongst wealthier Sydney home owners.

 

The top 5 regional suburbs of NSW suggest both the regional relocation trend and first home buying are at play.  A lot of regional relocators are targeting affordable commuter hubs, which is why we see Wollongong, the Central Coast and Lake Macquarie represented here.

 

Next to Melbourne and regional Victoria.

 

Top 5 suburbs for house price growth – Melbourne

1. Somers (Mornington Peninsula) up 83% to a median $1,746,000
2. Blairgowrie (Mornington Peninsula) up 49% to $1,375,000
3. McCrae (Mornington Peninsula) up 43% to $1,170,000
4. North Warrandyte (Nillumbik LGA) up 36% to $1,251,500
5. Portsea (Mornington Peninsula) up 35% to $2,900,000

 

Top 5 suburbs for house price growth – Regional Victoria

1. Mortlake (Moyne LGA) up 73% to a median $285,500
2. Corinella (Bass Coast LGA) up 55% to $640,000
3. Heyfield (Wellington LGA) up 54% to $290,000
4. Nhill (Hindmarsh LGA) up 51% to $170,000
5. Mirboo North (South Gippsland) up 41% to $440,500

So, as you can see, four of Melbourne’s top five suburbs are on the Mornington Peninsula, south-east of the city, which offers a great seachange lifestyle within commuting distance of the CBD.

 

However, unlike Sydney, Melbourne’s top 5 all have a median above $1 million, indicating that moving to the outskirts has little to do with comparative affordability and more to do with a lifestyle upgrade.

 

The top 5 regional areas of Victoria are dominated by suburbs in the Gippsland and East Gippsland regions, which offer affordable seachange, treechange and ‘snowchange’ options.

 

Let’s go north to Brisbane and regional Queensland.

 

Top 5 suburbs for house price growth – Brisbane

1. Norman Park (Brisbane LGA) up 35% to a median $1,150,000
2. New Farm (Brisbane LGA) up 30% to $2,100,000
3. Graceville (Brisbane LGA) up 28% to $1,140,000
4. Thorneside (Redland City) up 28% to $671,000
5. Red Hill (Brisbane LGA) up 27% to $1,100,000

 

Top 5 suburbs for house price growth – Regional Queensland

1. Willow Vale (Gold Coast) up 115% to a median $1,014,000
2. Charters Towers City (Charters Towers Region) up 72% to $182,500
3. Cloncurry (Cloncurry LGA) up 52% to $205,000
4. Dysart (Isaac LGA) up 39% to $142,500
5. Port Douglas (Douglas LGA) up 38% to $775,000

 

Brisbane isn’t experiencing an inner city decentralisation like Sydney and Melbourne because it’s a much smaller city with much lower density housing.

 

The dominant trend is upgrading, with families targeting desirable inner suburbs, which is why New Farm, Graceville, Norman Park and Red Hill are in the top 5.

 

House price growth in Thorneside represents strong first home buyer activity. It’s situated in the Redland City region, which offers great affordability and a coastal lifestyle within a 45-minute drive of Brisbane CBD.

 

The top 5 regional suburbs are a mixed bag and less reflective of COVID-19 trends. At the top is Willow Vale, situated in the fast growing corridor between Brisbane and the Gold Coast, where there is a lot of new housing and significant new infrastructure on the way, too.

 

Also in the top 5 are mining towns Dysart and Charters Towers, with house price growth resulting from high demand due to a resurgence in the mining sector and many new jobs over FY21.

 

Finally, let’s look at the national capital.

 

Top 5 suburbs for house price growth – Canberra

1. Garran (Woden Valley) up 37% to a median $1,410,500
2. Palmerston (Gungahlin) up 34% to $815,000
3. Mawson (Woden Valley) up 31% to $975,000
4. Campbell (North Canberra) up 31% to $1,511,000
5. Strathnairn (Belconnen) up 30% to $535,000

Source: CoreLogic, Market Trends, Year to June 30, 2021, suburbs with 40+ sales

Canberra’s strong house price growth in FY21 was a result of upgrading and record first home buying. Since 2019, stamp duty has been waived for first home buyers on both new and established homes at any price. The impact was a redirection in demand from apartments to houses. A price cap of $1 million now applies for FY22. 

 

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Whilst these trends are the result of the pandemic, they’re not likely to end any time soon. The first movers acted in FY21, but plenty more Australians will be looking to make similar changes in their lives in FY22.