Home values in many suburbs have doubled since the onset of the pandemic – but experts warn of changing trends
In the wake of a housing shortage and the lingering effects of the pandemic, property values in many suburbs on the outskirts of major cities have experienced a doubling in prices since the onset of the pandemic.
However, economists caution that this remarkable growth is unlikely to be replicated due to a shift in the business landscape, as companies encourage employees to return to the office, reducing the demand for housing in distant suburbs, according to a report by The Australian.
Data from PropTrack highlights that the majority of suburbs witnessing a surge in property values are located in Greater Sydney and New South Wales. While home prices declined in the past year following the Reserve Bank's decision to raise interest rates, strong demand, driven by record population growth and limited housing supply, has resulted in five consecutive months of price gains in 2023.
Leading the national growth is Boat Harbour in the Hunter region of New South Wales, where median house prices skyrocketed by 102% to reach $1,707,500 over a 16-month period ending in May. Proston in South Burnett, Queensland, and Humpty Doo in the Northern Territory also experienced a doubling of property values within 20 months, The Australian reported.
“Glory days have peaked”
Cameron Kusher (pictured above), executive manager of economic research at PropTrack, suggested that the exceptional growth in these suburbs was largely influenced by the aftermath of the pandemic, when people were relocating to the outskirts and regional areas. However, he believes that this trend is an anomaly unlikely to recur.
“The glory days of these areas have peaked, and the desire to move further out isn't as strong as during the pandemic, with businesses wanting people back in the office,” Kusher told The Australian.
PropTrack's data reveals that five out of the top 10 suburbs with significant growth are situated in Greater Sydney. Nirimba Fields in the northwest region experienced a price increase from $541,000 to $1.13 million within 22 months. Box Hill, Melonba, and Grantham also witnessed a doubling of prices in less than two years. In Vineyard, near Richmond, values surged from $2,417,500 to $5 million within 24 months. All of these suburbs recorded a minimum of 10 sales over a 12-month period, The Australian reported.
Kusher attributed the growth in these fringe suburbs to the replacement of outdated houses with new, high-quality properties, which has subsequently driven up prices. Murrays Beach in NSW and the Victorian town of Wy Yung also made it to the top 10 list.
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While the housing market approaches peak interest rates and faces limited buyer options, experts anticipate that house prices could reach a record high as early as January. After a 10-month decline until December, housing costs have gradually recovered by 1.55% and are now only 2.6% below the peak witnessed during the pandemic, according to The Australian.
Kusher said that inner and middle-ring suburbs are now leading the rebound, overshadowing the growth in outer suburbs.
“A lack of supply is having the biggest impact on prices,” he told The Australian. “In January we forecast values to fall 10% this year, which is unlikely to happen as the shortage of homes is offsetting any effects from interest rates.”
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