Best Places to Buy a House in Australia

If you’re interested in buying a house with a view to it increasing in value at an above average rate, a report released today may be of interest.

The National Hotspots property report from St.George Bank identifies the suburbs that offer the best value houses in Australia.

The best value for home buyers, says the report, can be found in 24 places across the country, taking into account their location, the price of housing and locally available amenities.

The suburbs should prove suitable for both people looking to make a home and investors seeking to make a profit over the medium to long term.

Best Places to Buy a House in Australia

Brisbane: Cannon Hill, Fairfield, Kedron, Keperra, Margate.
Cannon Hill, Fairfield, Kedron, Keperra all lie within 10 km of the central city. Average home prices range from about $400,000 in Keperra to $590,000 in Fairfield. Margate, on the coast, has an average price of $347,500.

Sydney: Granville, Lidcombe, Riverwood, Rockdale, Waterloo.
Sydney’s hotspots are mainly in the west and southwest of the city, with one – Waterloo – within 10 km of the central business district. The average house price in Waterloo is $560,000. Prices elsewhere are: Granville – $347,500, Lidcombe – $475,000, Riverwood – $470,000, Rockdale – $525,000.

Melbourne: Ashburton, Brunswick, Chadstone, Fawkner, Flemington.
Brunswick and Flemington are within 5 km of the city centre. Both have an average property price of about $530,000. Ashburton, which lies 12 km southeast of the central city, was the most expensive suburb in the survey with a median price of $706,750. Fawkner had the cheapest houses of Melbourne’s identified suburbs at $337,500.

Adelaide: Thebarton, Glanville
Thebarton, with an average house price of $390,000, sits within 5 km of the central business district. Glanville, with an average house price of $300,000, is further out.

Perth: Bassendean, Thornlie
Bassendean is within 10 km of the central city and has an average house price of $445,000. Thornlie is further away, with average price $365,000.

Hobart: North Hobart – $335,000

Canberra: Dickson – $505,000

Darwin: Rapid Creek – $523,500

Regional Australia: Gulliver (Queensland), Redan (Victoria). Gulliver’s average house price is $294,500 while Redan, a suburb of Ballarat, Victoria, is the cheapest of the 24 locations, with an average house price of just $190,000

Of the 24, the report’s authors believed the very best were Granville (Sydney); Chadstone (Melbourne); Keperra (Brisbane); Bassendean (Perth); and Thebarton (Adelaide).

Besa Deda, St.George Bank’s Chief Economist commented:

“Over the 12 months to June, all mainland Australian capital city median dwelling values have risen. While Adelaide has recorded the smallest growth at just 0.6 percent, Darwin values have jumped 7.0 percent. Other capital cities have also seen median house prices increase: Melbourne (6.5 percent); Sydney (5.9 percent); Perth (1.9 percent); and Brisbane (1.4 percent).”

The 24 hotspot suburbs identified include an interesting mix of older demographic areas where the majority of dwellings are owner-occupied but have great potential for renovation, and younger demographic areas where the dwellings are dominated by apartments and offer good value for money.

In addition, just about all the hotspots are in close proximity to retail amenities and restaurants, are well serviced by public transport and, most importantly, are all discounted or underperforming for their current location when compared with nearby suburbs. As a result, they are expected to perform well.

“Savvy home buyers and investors should look outside the square and consider the areas which have not attracted the same level of attention as traditional blue-ribbon locations.”

“There are important demographic fundamentals that shed a favourable light on the prospects for residential housing lending and prices over the medium to long term. Population growth nationally is running at its fastest pace in 40 years at a time when there is a national shortage of housing,” said Ms Deda.

Fundamentally, an increasing population fuels demand for housing. Population growth has been running at this robust pace at a time when residential construction has been weak. The current undersupply of housing throughout Australia is estimated to sit anywhere between 20,000 and 80,000 per year. With fewer dwellings being built, the supply shortage continues to be exacerbated and is anticipated to increase over the next few years as the population grows further and the required amount of dwelling commencements needed to fill this shortage goes unfulfilled.

This imbalance between demand and supply has placed a floor under dwelling values and is likely to place upward pressure on dwelling prices over the medium to long term.

Overall, national demographics then are encouraging and favourable for a housing upswing in the medium term, particularly when combined with the current low interest rate environment.

A More Cautious Note

Striking a more cautious note, Associate Professor Steve Keen, an economist at the University of Western Sydney, believes property prices will fall by large amounts in the medium to long-term.

“The boost to house prices courtesy of what I call the first home vendors grant has been substantial,” he told economics correspondent Stephen Long in an interview to be broadcast on the ABC’s PM program tonight.

“It hasn’t only pushed up lower level prices below the $500,000 mark, it’s also boosted prices up to $1 million or more, because when those vendors sold their houses to the first home buyers they got an extra $30,000 or 40,000 in cash, which they leveraged up to an extra $200,000 to go and buy houses in the medium to high price range.”