Affordable suburbs with median house prices below $500,000 dominated the best areas for price growth across Australia last year.
CoreLogic’s annual Best of the Best report shows that buyers competed strongly for affordable homes in lower-priced markets amid high interest rates. Perth suburbs dominated the best growth areas nationally, with 30% gains in Brookdale, Armadale and Hilbert.
The opportunity for people now working from home to leave the expensive cities and relocate to cheaper capital cities and regions likely played a role in strong buying demand in Australia’s more affordable suburbs.
The fact that Perth (15.6% growth in house prices) and Brisbane (13.3%) recorded stronger growth than Sydney (12.5%) and Melbourne (3.8%) demonstrates this trend. Perth is long overdue for growth and Brisbane is the most affordable capital city for East Coast buyers.
We’re also seeing more investors buying in areas well away from where they live to capture better yields and potentially more capital growth on a lower budget backed by smaller loans.
Another noticeable trend in 2023 was strong price growth in prestige suburbs. Nationally, two prestige suburbs were among the top areas for house price rises. They were Whitlam in Canberra with 29.1% growth and Bayview in Sydney with 25.3% growth.
This is reflective of strong ongoing demand in the $5 million-plus segment of the market. That’s being powered by wealthy families acquiring trophy residences or buying for their children, or grandchildren. Rising interest rates don’t impact these buyers, who are typically purchasing with cash. I think this part of the market will remain very strong in 2024.
Let’s take a look at the suburbs that recorded the best house price growth along the East Coast of Australia last year.
Top 10 growth suburbs of the East Coast capital cities
- Whitlam, Canberra (up 29.1% to $1,158,983)
- Bayview, Sydney (up 25.3% to $3,123,777)
- Bellevue Hill, Sydney (up 24.9% to $9,731,177)
- MacGregor, Brisbane (up 24.7% to $1,176,284)
- Coopers Plains, Brisbane (up 24.6% to $946,069)
- Canterbury, Sydney (up 23.5% to $1,728,346)
- Salisbury, Brisbane (up 23% to $1,024,724)
- Wishart, Brisbane (up 22.9% to $1,297,882)
- Eight Mile Plains, Brisbane (up 22.8% to $1,300,767)
- Hurlstone Park, Sydney (up 22.6% to $2,080,063) and Ascot, Brisbane (up 22.6% to $2,462,657)
Top 10 growth suburbs of the East Coast regions
- Tralee, NSW (up 34.2% to $782,764)
- Mount Morgan, Queensland (up 22.8% to $198,636)
- Barraba, NSW (up 21.2% to $258,652)
- Gundagai, NSW (up 17.9% to $406,614)
- West Wyalong, NSW (up 17.6% to $301,559)
- Gilston, Queensland (up 17.4% to $1,074,328)
- Rosemount, Queensland (up 17% to $1,247,260)
- Blackwater, Queensland (up 17% to $184,070)
- Gilgandra, NSW (up 16.8% to $214,936)
- Mount Perry, Queensland (up 16.5% to $260,167)
It seems we’re probably going to see interest rate cuts in 2024, but not until later in the year.
Every cut – usually 0.25% at a time – is helpful to existing homeowners in managing much higher loan repayments these days in the middle of a cost-of-living crisis caused by inflation.
But the Reserve Bank is likely to go slow with rate cuts, and I sense the first one or two cuts won’t make a material difference to borrowing capacities. This along with the pressure to lower migration this year may mean a bit less demand and more moderate price growth, especially if supply increases.
Increasing population will drive property price growth in Cairns above the Brisbane average over the next three years, according to a new report.
According to the organisation’s findings from its flagship Residential Property Prospects report “prices in North and Far North Queensland are starting from a more affordable base, while the downward trend in total listings is limiting the pass through of tight credit conditions”. Quarterly growth returned in both markets in the third quarter of 2023, with the median house price hitting $580,000 in Cairns and $410,000 in Townsville.
Oxford Economics Australia forecasts that the median house price will rise by near six per cent per annum in both regions over the three years to 2026.
This will see price growth outpace Brisbane, closing the price gap to the state’s capital.
The report said elevated home insurance costs in North Queensland had dragged on house price growth over the past decade, but the introduction of the $10bn Northern Australia Cyclone Reinsurance Pool in mid-2022 provides a potential upside for house prices via the reduction of insurance premiums.
Maree Kilroy, report author and senior economist at Oxford Economics Australia told the Cairns Post: “Recovering tourist flows and a firming investment outlook will sustain a tight labour market, contributing to higher rates of population growth and maintaining pressure on the housing stock, driving upwards pressure on property prices”.
The report noted that risk exists for the Cairns market as the impact of tropical cyclones plays through.
Ex-tropical cyclone Jasper caused a record level of rain resulting in significant flooding.
This will impact the dwelling stock, likely pushing some residents into the rental market in the short-term, the report said.
Ms Kilroy said: “Short term, Cyclone Jasper will add pressure to the rental market with households needing significant repairs to their dwelling seeking temporary rental properties”. “Longer term the cyclone will likely lead to expensive home insurance bills in North Queensland adds downside risk to prices.”
Ms Kilroy said in the last few years affordability had deteriorated more so in Brisbane (and more broadly South East Queensland) than in Cairns.
She said that since bottoming out in the December quarter of 2022, Brisbane became one of the strongest markets through 2023.
Advertised stock levels are running more than 30 per cent below average, while the volume of home sales is trending almost five per cent above average levels.
“The return of interest rate cuts from late-2024 should facilitate even stronger price growth over the two years to FY2026.” the report said.
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The number of properties subject to land tax in Queensland has jumped more than 10 per cent in the past financial year as the value of land continues to rise.
Key points:
- Thousands more Queensland properties are falling under the state’s land tax regime amid rising land values
- The Real Estate Institute of Queensland wants the $600,000 land tax threshold to increase with inflation
- The state government says indexing the threshold would cost the budget $200 million per year in revenue
In Queensland, individuals are charged land tax when the total land value of their investment properties is worth $600,000 or more.
The $600,000 threshold has remained unchanged since 2007, which is something the Real Estate Institute of Queensland (REIQ) objects to.
The stakeholder group, which advocates for property investors, wants the threshold to increase in line with inflation, suggesting the unchanged threshold is leading to a kind of bracket creep.
But the state government has hit back at the proposal, insisting that indexing the threshold would cost the state budget as much as $200 million per year in revenue.
New figures from the Queensland Revenue Office show that in the 2022-23 financial year, 175,556 properties were subject to land tax — up from 157,485 the year before.
The number of individuals who were liable to pay land tax after exceeding the $600,000 threshold also increased from 34,021 in 2021-22 to more than 44,000 in 2022-23.
The increase in properties falling under the land tax regime comes amid rising land valuations across the state.
In Brisbane, for example, Queensland’s valuer-general determined that land values increased by 17.5 per cent in 2022, followed by another 11.9 per cent jump in 2023.
In Ipswich, land values climbed 23.1 per cent in 2022, followed by another increase of 33 per cent in 2023.
The Queensland Revenue Office has also confirmed it issued 19,382 land tax exemptions to first-time taxpayers in 2022-23, which was up from the 12,340 issued the year before.
‘Massive windfall’
REIQ chief executive Antonia Mercorella suggested said the existing situation had led to bracket creep and said REIQ wanted the threshold to be indexed in line with CPI.
“It’s logical that we are seeing thousands more properties being subject to the land tax regime because of course we know that the median price of property has gone up significantly,” she said.
“This represents a massive windfall for the state government and, certainly, we have been saying for many years that it really is time to review that threshold.
“Our concern is that land tax does act as a fairly significant deterrent for investment. And of course, there is an argument that inevitably that land tax bill gets passed onto the renter.”
In a statement, Deputy Premier and Treasurer Cameron Dick said Queensland had one of the most generous land tax thresholds in the country.
He also pointed out that the tax did not apply to the family home.
“Queensland collects less than half as much in land tax per capita as New South Wales or Victoria. This revenue funds the frontline,” he said.
“Queensland Treasury forecasts that the cost of indexing land tax would reach more than $200 million in forgone revenue each year from 2025-26.
“Anyone proposing that land tax be cut would need to identify what services or jobs would be cut to pay for that loss of revenue.”
The latest figures in Queensland’s mid-year budget showed the state government made $1.73 billion from land tax in 2022-23, which was a $99 million increase from 2021-22.
And the revenue was tipped to grow even further this financial year to $2.03 billion, and then reach $2.32 billion by 2024-25.
While the land tax threshold for individuals sits at $600,000, for companies and trusts it is set at a lower $350,000.
The threshold for companies and trusts also has not changed since 2007.
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