Revealed: The cheapest and priciest suburbs for investors in 2023

In its latest report, the firm highlighted that rising inflation, coupled with the Reserve Bank of Australia’s (RBA) hike rate cycle, saw “uncertainty reign supreme” in the market. 

Since May last year, the central bank has raised the official cash rate in a bid to rein in inflation under its 2 to 3 per cent target. Following nine consecutive months of rate hikes, the RBA board has bolstered the country’s interest rate to 3.35 per cent in February, its highest level since October 2009. 

With inflation refusing to budge in the face of the central bank’s monetary policy tightening, experts are forecasting more rate rises in the coming months. 

One major impact of the rising rates, according to the report, is the overall decline in housing prices across the country. 

The report cited a separate report from property analytics firm CoreLogic, which showed national housing values decreased by 3.2 per cent over the year to November, driven by a 5.2 per cent annual reduction in capital city dwelling values. 

It highlighted that the declines have led to the estimated total value of residential real estate decreasing from $9.6 trillion in December 2021 to $9.4 trillion in November 2022. 

With the rate hikes eroding the buyers’ borrowing capacity, data also showed that the estimated annual sales declined 13.3 per cent compared to the year to November 2021, with approximately 535,000 homes sold nationally.

As for the impact of the declines, Savvy emphasised that the effects of higher interest rates are “far from uniform”. 

“When compared to high-density and regional markets, more costly housing alternatives, such as detached houses and capital city markets, have often experienced bigger value reductions,” the report stated. 

Despite the slide in capital city values, combined regional property values are still 3.3 per cent higher than they were at this time last year.

Similarly, capital city home prices fell by 5.5 per cent while capital city unit (apartments, flats, etc.) values had a smaller 4.3 per cent dip.

The yearly change in housing values in the nation’s key cities ranged from an overall loss of 10.6 per cent in the Greater Sydney market to an increase of 13.4 per cent in values in Adelaide.

Regional markets continue to provide reasonably priced price points despite stronger value increases during the upswing; the combined median regional dwelling value is around $200,000 less than the combined median capital city dwelling value.

“Because they demand larger debt levels to access, more expensive housing markets may have been more sensitive to recent rate increases,” the report stated.

In the wake of the significant shift in markets, the report enumerated which suburbs are the most expensive and which are the cheapest to buy into.

Most and least expensive suburbs 

Greater Sydney dominated the “most expensive” category, with three of the most expensive house markets located in the area.

The most expensive suburb to buy into is the leafy and upmarket suburb of Vaucluse, with an eye-watering median house price of $7,943,965. 

This was followed by Bellevue Hill with a median of $6,882,484 and Rose Bay at $5,660,910. 

Point Piper, also located in NSW, was the priciest suburb for units, with a median price tag of $2,895,563. Darling Point was next at $2,371,718 and Millers Point at $2,111,672. 

On the other end of the spectrum, the least expensive or most affordable suburb to buy a house in was Kambalda East, located in Western Australia’s regional centre of Goldfields-Esperance, with a median house price of $118,525. 

In capital cities, the most affordable suburbs for those looking to buy a house were Elizabeth North in Greater Adelaide with a median house value of $291,526; Kwinana Town Centre in Greater Perth is next with $300,252 and Elizabeth Downs in Greater Adelaide at $305,336.

The cheapest suburb to purchase a unit was Laguna Quays in Queensland at a rather modest $72,076 around the price of an electric vehicle.

Across capital cities, the most affordable or least expensive suburbs for unit purchases are Orelia in Greater Perth with a median value of $183,522, followed by Greater Brisbane’s Kooralbyn ($202,039) and Goodna ($233,334).

In terms of price growth, the strongest 12-month gain in rents for houses was in Clovelly, in Greater Sydney, rising by 25.1 per cent. 

Interestingly, the highest gross rental yields were in Kambalda East at 15.9 per cent, with the report highlighting that the surge can be attributed to the demand for mining accommodation. 

The highest 12-month growth in rents for units was in Inner Melbourne at 38.2 per cent and the highest gross rental yields for units were in Kalgoorlie at 11.8 per cent.

On one hand, the strongest 12-month decline in values of residential houses was in Greater Sydney’s Narrabeen, declining 26.8 per cent with Centennial Park experiencing a decline of 23.1 per cent in the unit value. 

Most affordable and priciest suburbs in each capital cities

If your buying prospects are limited to a specific state or territory, here is a breakdown of the most and least affordable suburbs per state/territory. 

NSW

• Most expensive suburb (Houses): Vaucluse, median value of $8,025,501
• Most expensive suburb (Unit): Point Piper, median value of $4,811,071
• Most affordable suburb (Houses): Peak Hill, median value of $180,870
• Most affordable suburb (Units): Lavington, median value of $251,406

Victoria 

• Most expensive suburb (Houses): Toorak, median value of $4,955,630
• Most expensive suburb (Units): Beaumaris, median value of $1,209,944
• Most affordable suburb (Houses): Hopetoun, median value of $178,811
• Most affordable suburb (Units): Moe, median value of $245,467

Queensland 

• Most expensive suburb (Houses): Sunshine Beach, median value of $2,198,40
• Most expensive suburb (Units): Noosa Heads, median value of $1,409,790
• Most affordable suburb (Houses): Tara, median value of $146,122
• Most affordable suburb (Units): Laguna Quays, median value of $72,076

Western Australia 

• Most expensive suburb (Houses): Peppermint Grove, median value of $3,178,788
• Most expensive suburb (Units): North Fremantle, median value of $902,683
• Most affordable suburb (Houses): Kambalda East, median value of $118,525
• Most affordable suburb (Units): Withers, median value of $131,547

 South Australia

• Most expensive suburb (Houses): Toorak Gardens, median value of $2,067,074
• Most expensive suburb (Units): Kent Town, median value of $655,239
• Most affordable suburb (Houses): Peterborough, median value of $130,627
• Most affordable suburb (Units): Mount Gambier, median value of $245,692

 Tasmania 

• Most expensive suburb (Houses): Battery Point, median value of $1,464,685
• Most expensive suburb (Units): Battery Point, median value of $865,562
• Most affordable suburb (Houses): Rosebery, median value of $163,884
• Most affordable suburb (Units): Mowbray, median value of $333,200

 Northern Territory 

• Most expensive suburb (Houses): Nightcliff, median value of $919,048
• Most expensive suburb (Units): Bayview, median value of $547,739
• Most affordable suburb (Houses): Tennant Creek, median value of $239,590
• Most affordable suburb (Units): Bakewell, median unit price of $284,341

 ACT

• Most expensive suburb (Houses): Griffith, median value of $2,265,479
• Most expensive suburb (Units): Yarralumla, median value of $1,124,600
• Most affordable suburb (Houses): Belconnen, median value of $614,531
• Most affordable suburb (Units): Curtin, median value of $405,491

Don’t wait for prices to hit “rock bottom” 

The declines have led to some investors shifting their strategy to waiting for prices to hit “rock bottom” before purchasing a property as rates continue to rise, but Savvy’s finance spokesperson Adrian Edlington said the undertaking may be “a bit of a ‘fool’s errand’.” 

“Right now, house prices are falling across the board, and some may be waiting to pick up a bargain at the floor, which means first-time buyers and investors are at the upper hand in negotiation for the first time in a long time,” he stated.

He highlighted that this advantage may be “short-lived”, stating that “if [investors] wait for houses to hit the absolute rock bottom prices, chances are you’ll be locking in an interest rate that’s at the highest it’s been since the end of the Global Financial Crisis”. 

“It’s doubtful we’ll see the ‘bad old days’ of 17 per cent rates like we did in the 1990s, but even slight upticks in RBA cash rates can make all the difference between servicing a loan for some and missing out entirely,” he stated.