Stunning homes are always going to attract buyers, but there are many factors that define a great neighbourhood.
New data has revealed the pockets that fetch a premium in each suburb, and where buyers may be able to settle for a fraction of the cost.
Households are spending more time at home than ever before, so it may come as no surprise that suburbs offering beautiful homes, nearby amenities and spectacular views have been popular during the pandemic, and buyers are willing to pay top dollar to live in an area offering all three.
Data from realestate.com.au compares the median estimated valuation of houses in various micro-regions within the same suburb to identify the most expensive and affordable pockets.
A property’s valuation could be influenced by its own sales history and/or valuations of similar houses in neighbouring pockets. All median estimated valuations are current as of July 2021.
REA Group’s director of economic research Cameron Kusher said location, particularly proximity to water, and the quality of the homes were the main drivers of prices.
“The typical things that are most sought-after are water frontage, views and parks. While public transport proximity may be desirable, if you are too close to say a rail line this may in fact be negative for prices,” Mr Kusher said.
But while prestige waterfront and leafy suburbs across Sydney, Melbourne and Brisbane demanded the highest price tags, it is possible to buy a home in these prized postcodes at a much lower entry point, if you’re willing to give up some of the more desirable traits, like views and space.
“The factors that drive price differential may be proximity to main roads, public transport, views, schools, shops, flight paths, water or parks. Keep in mind that in some instances proximity to any of these factors may be seen as either a positive or a negative,” Mr Kusher said.
“In many high-priced suburbs there are cheaper options for buyers in the form of a unit or townhouse as opposed to a house. Sure they don’t have the same living space, yard or desirability, but they do afford people the opportunity to live in the suburbs they desire even if they may not be able to afford a house,” he said.
The prestigious suburbs with a lower entry point
While an eight-figure sum is needed to crack into Sydney’s tightly-held Point Piper housing market, the neighbouring suburb of Rose Bay still offers harbourside living at a fraction of the cost.
According to realestate.com.au, median estimated house values in Rose Bay varied from an eye-watering $22.7 million for waterfront properties, down to a more modest $2.7 million.
Mr Kusher said proximity to the harbour was a major factor.
“It shows the significant premium people are paying for absolute water frontage as opposed to the rest of the suburb, which is still expensive, but the cost reduces dramatically once you shift away from that area,” he said.
Local agent Samuel Schumann from Raine & Horne said it was possible to purchase in Rose Bay for less than a million dollars, although it wouldn’t be a freestanding home.
“In terms of the variance [in prices] you’ve got waterfront properties on Tivoli Avenue that sell for tens of millions, all the way through to small apartments in Rose Bay North that go for $600,000 to $700,000,” Mr Schumann said.
“We just sold a property on The Avenue, it was a smaller block of land but still a freestanding house. It needed some work, but it was very liveable and that sold for $2.2 million.”
He said prices across Rose Bay had soared in the past year, and buyers were spilling over from neighbouring suburbs as they struggled to find properties.
“Listing levels are down and demand is through the roof,” Mr Schumann said.
“Buyers that were looking for bigger blocks of land in areas like Vaucluse have actually migrated into postcodes like Rose Bay,
“We’ve had examples where people are saying ‘just find me anything, I don’t care about the current condition’,” he said.
Many of the suburbs with the largest variation in estimated house values were in affluent areas offering water views, big blocks and a village lifestyle.
To be included in the list with the biggest variation in estimated house values, suburbs had to have a minimum of five sales in the past 12 months.
After Rose Bay, Woollahra and Vaucluse showed the biggest differences in minimum and maximum median estimated house valuations in Greater Sydney, with values within those suburbs varying by almost $9 million. Eight of the top 10 Sydney regions were located in the eastern suburbs, with beachside Manly and harbourfront Mosman also making the list.
Toorak recorded the biggest fluctuations in Melbourne, with an $8.8 million gap between the top and bottom median valuations. Mansions along Brighton’s beachfront had median estimated valuations of more than $7 million, but buyers may still be able to secure a house within the ‘3186’ postcode with a median valuation of upwards of $1.7 million.
Kangaroo Point topped the list in Brisbane with a $7.4 million variation in house values. Perth’s Mosman Park showed a $5.2 million gap, where buyers could find houses with median estimated valuations anywhere from $6 million on ‘Millionaires’ Row’ on Saunders Street, or closer to $1 million along the Stirling Highway.
In Canberra, Red Hill had the largest valuation gap at $3.9 million, properties in central Adelaide had a difference of $2.09 million, while median values in Hobart’s Sandy Bay varied by $785,000.
Mr Kusher said while the data should be used as a guide only, it highlighted the importance of buyer due diligence, as a blanket approach to median house prices often don’t tell the whole story.
“If for example, a buyer rules out a suburbs because the median price is too high, this data shows they may have been able to actually afford to live in the suburb in one of the cheaper pockets,” he said.
Rather than settling within a particular postcode, Sydney-based buyer’s agent Ramon Mitchell, from Gault & Co, said buyers who didn’t want to compromise on their must-haves could consider neighbouring suburbs.
“What people tend to do is they’ll apply a budget and a certain lifestyle requirement, and then they’ll go and road test that in different suburbs, so it’s more about finding the right fit for the lifestyle that works within their budget whilst ticking as many boxes as possible on the wish list,” Mr Mitchell said.
“Let’s use Manly as an example. They’ve got certain requirements in terms of the number of bedrooms, bathrooms, car spaces and proximity to the beach. Rather than compromise on those must-haves they might start moving back towards Queenscliff or North Manly or other pockets that are close by where the median price entry point is comparatively lower,” he said.
Regional shift pushing up prices in popular beachside towns
As with the capital cities, regional towns close to the beach or offering water views or nice scenery have grown in popularity during COVID-19, as lockdowns and flexible working arrangements keep people close to home.
Mr Kusher said low interest rates and restrictions on how people can spend their money have caused prices to surge, as more money is directed into property.
“Since the pandemic hit and the first lockdowns ended, we have been seeing rapid increases in property prices across the nation,” Mr Kusher said.
“Regionally we are seeing prices rise quite dramatically in streets in some of the most sought-after regions, places like Byron Bay or Noosa,” he said.
Homes in Noosa Heads on Queensland’s Sunshine Coast vary in median valuations from more than $6 million along the prestigious river inlet to $1.1 million further out from the main shopping junction.
“Stock is the tightest we’ve ever seen, and I’ve specialised in this area for 21 years,” Ms Plummer said.
“I’ve got one example of a property that was sold 18 months ago for $750,000. We’ve sold it for just under $1.3 million. That’s a 68% increase in 18 months,” she said.
Along with interstate demand, Ms Plummer said international interest in the area had also grown.
“A lot of expats are looking to come home, so I guess what’s going to be interesting is what might happen to our market when international borders are open,” she said.
“We can’t see any real reason why this market is going to necessarily stall or slow down. There are some people of the view that it will, but from my perspective the demand is just too great at this particular point in time.”
Mr Kusher said while regional properties are becoming more popular, the capital cities will always attract the most money.
“I still think that people are going to continue to pay a premium to be in those capital city markets,” he said.
“But no doubt some of those regional markets will see some big lifts in those more expensive streets and enclaves as well as more and more people want to move to regional areas and really focus on that lifestyle in a post-COVID world.”
DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.