Rate hikes divide housing market: Almost one in two capital city suburbs hit record high

Research News   •   08 May 2024

Amidst Australia’s historic two-year rate hike cycle, the property market has become a picture of resilience and decline, showcasing stark contrasts across cities, suburbs, and regions.

A CoreLogic Australia analysis comparing the property market’s performance two years before and after the rate hike cycle reveals that home values across the nation have risen only 2.8% since April 2022, contrasting sharply with the substantial 31.7% increase observed in the preceding two years.

CoreLogic Research Director Tim Lawless said the relatively small capital gain over the past two years is a legacy of the -7.5% drop in national values during the early phase of the rate hiking cycle when the national index consistently fell between May 2022 and January 2023.

Since CoreLogic’s national Home Value Index bottomed out in Jan 2023, values have risen every month to be 11.1% higher.

”The perception might be that property values are continually increasing but we can’t forget the short and very sharp downturn that occurred in the immediate aftermath of the first rate increases,” he said.

“Since the market bottomed there’s been 15 consecutive monthly increases in values nationally, but that performance is not indicative of the entire market. Underneath the headline figure there’s significant diversity in the housing market’s performance.”

The percentage change in housing values through the rate hiking cycle to April 2024 ranges from a 25.7% surge in Perth house values, to an -11.2% drop in Hobart house values. In Sydney, house values have increased 0.4% in the past two years compared to Melbourne where houses are now -4.2% more affordable than they were in April 2022.

“Such a discrepancy in growth rates highlights the diversity of market conditions over the past two years. This reflects the complexity within local markets. While some cities have exhibited resilience driven by robust economic fundamentals and housing demand, others such as Melbourne, Hobart and Canberra, where housing is more affordable now compared to two years ago, have grappled with factors such higher supply, affordability constraints and weaker demographic trends,” Mr Lawless said

Record high suburbs despite rate hikes

Rate hikes have had little bearing on the performance of many Australian suburbs, with 43.6% hitting a record high at the end of April 2024. Capital city suburbs have shown more resilience compared to the regions, with almost one in two (49.1%) hitting a peak last month compared to 35.0% of suburbs in regional areas.

”Demand for housing in Australia remains extremely high in many areas particularly with the added pressure of record high migration levels, persistently tight rental conditions and an undersupply in dwellings. These figures show buyers are determined to get their foot in the door of home ownership irrespective of rate hikes and the rising cost of living,” Mr Lawless said.

Portion of suburbs where dwelling values are at record highs, April 2024

 # at peak% at peak
Combined capitals1,07649.1%
Combined regionals49035.0%
Australian Capital Territory44.1%
Greater Adelaide28890.0%
Greater Brisbane29285.1%
Greater Darwin24.5%
Greater Hobart00.0%
Greater Melbourne61.5%
Greater Perth29097.3%
Greater Sydney19430.5%
Rest of NSW7515.2%
Rest of NT00.0%
Rest of Qld28665.0%
Rest of SA4460.3%
Rest of Tas.23.2%
Rest of Vic.52.6%
Rest of WA7860.5%

Nine of the top 10 suburbs with the strongest house value growth over the past two years are in Western Australia. Armadale, in Perth’s south-east growth corridor, topped the list, increasing 60.0% since April 2022, adding to the 36.2% gain in the preceding two years.

Perth had 97.3% of suburbs at a record high in April 2024, beating out Adelaide at 90.0% and Brisbane (85.1%). In weaker markets, not a single suburb of Hobart was at a record high and only 1.5% of Melbourne suburbs – six suburbs all in the South East – were at a record high last month.

The lowest growth suburbs are concentrated in regional markets, especially areas of the Richmond Tweed in NSW, which accounted for 10 of the ‘bottom’ 20 suburbs for change in house values since April 2022, and five of the bottom 20 suburbs for weakest unit values.

“The weak conditions over the past two years is in stark contrast to the previous two years where some suburbs recorded a growth spike of more than 90%,” Mr Lawless said.

“The large drop in values can probably be attributed to a combination of a natural correction after values overshot what might be described as fair value, but also the severe weather and flooding events that impacted areas of northern NSW in early 2022.”

Hobart, Melbourne and ACT bear brunt of rate hikes

Nationally, 37.9% of suburbs have recorded a decline in dwelling values since the rate hike cycle began. Hobart suburbs have been hit hardest with 98.0% declining in value, followed by Melbourne at 87.8% and the ACT at 87.6%.

Mr Lawless said these markets had felt the impact of rising interest rates due to a better balance between the underlying demand/supply fundamentals, leading to widespread falls in property values across most suburbs.

“Hobart and Canberra were buoyant with housing activity during the height of the pandemic but they’ve since faced a rise in listings, affordability constraints, and subdued demographic conditions such as negative interstate migration levels,” Mr Lawless said.

”Melbourne’s under-performance relative to other capital cities is due to several factors. The city experienced softer housing market conditions through the pandemic, which coincided with a sharp drop off in net overseas and record low interstate migration rates. More recently, this has been compounded by a raft of policy changes that has dampened buyer confidence despite surging overseas migration and a slowdown in the interstate migration outflow.”

In contrast, no suburbs in Adelaide and only one suburb in Perth (Peppermint Grove, down -0.6% since April 2022) have recorded a decline in values since April 2022.

“Even in the face of higher mortgage rates and reduced borrowing capacity buyers, including investors, have turned to Perth and Adelaide for their relative affordability, strong rental conditions and higher gross rental yields. The demand has outweighed supply, which has contributed to pushing values significantly higher over the past year,” Mr Lawless said.

“Perth in particular isn’t showing any signs of slowing just yet and is approaching the cyclical highs seen during the pandemic when interest rates were at rock bottom.”

In Brisbane, house values increased 50.9% in the two years to April 2022 and 6.1% in the two years since. By contrast, the unit market has performed consistently increasing 21.9% and 20.8% respectively.

Top Performing Suburbs Since Rate Hikes

National Top 20 – Houses

Suburb nameSA4 nameGCCSA name% value change
April ’22 to April ’24
Armadale (WA)Perth – South EastGreater Perth60.0%
Brookdale (WA)Perth – South EastGreater Perth56.0%
CamilloPerth – South EastGreater Perth54.5%
GreenfieldsMandurahGreater Perth49.5%
Seville GrovePerth – South EastGreater Perth49.0%
HilbertPerth – South EastGreater Perth48.1%
ParmeliaPerth – South WestGreater Perth47.9%
UsherBunburyRest of WA47.4%
WarnbroPerth – South WestGreater Perth46.9%
Elizabeth NorthAdelaide – NorthGreater Adelaide46.8%
MaddingtonPerth – South EastGreater Perth45.8%
KelmscottPerth – South EastGreater Perth45.5%
CooloongupPerth – South WestGreater Perth45.5%
Davoren ParkAdelaide – NorthGreater Adelaide45.4%
GosnellsPerth – South EastGreater Perth45.1%
HaynesPerth – South EastGreater Perth45.0%
WaikikiPerth – South WestGreater Perth44.8%
Ravenswood (WA)MandurahGreater Perth44.6%
Port KennedyPerth – South WestGreater Perth44.1%
BertramPerth – South WestGreater Perth44.0%

National Top 20 – Units

Suburb nameSA4 nameGCCSA name% value change
April ’22 to April ’24
Slacks CreekLogan – BeaudesertGreater Brisbane51.7%
Armadale (WA)Perth – South EastGreater Perth49.6%
EaglebyLogan – BeaudesertGreater Brisbane44.8%
BalgaPerth – North WestGreater Perth43.3%
Woodridge (Qld)Logan – BeaudesertGreater Brisbane41.3%
BeenleighLogan – BeaudesertGreater Brisbane40.6%
Manoora (Qld)CairnsRest of Qld40.1%
Underwood (Qld)Logan – BeaudesertGreater Brisbane39.5%
LightsviewAdelaide – NorthGreater Adelaide39.4%
Mount Warren ParkLogan – BeaudesertGreater Brisbane39.4%
Mitchell Park (SA)Adelaide – SouthGreater Adelaide39.4%
NollamaraPerth – North WestGreater Perth39.0%
DoolandellaIpswichGreater Brisbane38.8%
KlemzigAdelaide – NorthGreater Adelaide38.5%
Bayswater (WA)Perth – North EastGreater Perth38.1%
Logan CentralLogan – BeaudesertGreater Brisbane37.4%
MidlandPerth – North EastGreater Perth37.3%
WestminsterPerth – North WestGreater Perth37.1%
Camden Park (SA)Adelaide – WestGreater Adelaide36.0%
BroadviewAdelaide – NorthGreater Adelaide35.9%

Worst Performing Suburbs Since Rate Hikes

National Bottom 20 – Houses

Suburb nameSA4 nameGCCSA name% value change
April ’22 to April ’24
South LismoreRichmond – TweedRest of NSW-31.2%
Lismore HeightsRichmond – TweedRest of NSW-28.1%
MullumbimbyRichmond – TweedRest of NSW-27.1%
BangalowRichmond – TweedRest of NSW-25.9%
Lismore (NSW)Richmond – TweedRest of NSW-25.6%
Girards HillRichmond – TweedRest of NSW-22.7%
Ocean ShoresRichmond – TweedRest of NSW-22.3%
Culburra BeachSouthern Highlands and ShoalhavenRest of NSW-21.5%
Suffolk ParkRichmond – TweedRest of NSW-21.2%
Brunswick HeadsRichmond – TweedRest of NSW-20.1%
BundeenaSydney – SutherlandGreater Sydney-19.8%
Shoalhaven HeadsSouthern Highlands and ShoalhavenRest of NSW-19.7%
Flinders (Vic.)Mornington PeninsulaGreater Melbourne-19.4%
Soldiers Hill (Vic.)BallaratRest of Vic.-19.3%
Newington (Vic.)BallaratRest of Vic.-18.9%
Apollo Bay (Vic.)Warrnambool and South WestRest of Vic.-18.4%
Byron BayRichmond – TweedRest of NSW-18.3%
Black Hill (Vic.)BallaratRest of Vic.-17.9%
New Town (Tas.)HobartGreater Hobart-17.8%
Geilston BayHobartGreater Hobart-17.8%

National Bottom 20 – Units

Suburb nameSA4 nameGCCSA name% value change
April ’22 to April ’24
Suffolk ParkRichmond – TweedRest of NSW-30.5%
Byron BayRichmond – TweedRest of NSW-23.6%
East BallinaRichmond – TweedRest of NSW-20.7%
Ocean GroveGeelongRest of Vic.-19.9%
BallinaRichmond – TweedRest of NSW-19.8%
Lennox HeadRichmond – TweedRest of NSW-18.4%
KingsvilleMelbourne – WestGreater Melbourne-15.6%
DrysdaleGeelongRest of Vic.-15.1%
Sunrise BeachSunshine CoastRest of Qld-14.3%
Kew EastMelbourne – Inner EastGreater Melbourne-14.1%
Berkeley ValeCentral CoastGreater Sydney-13.7%
Caringbah SouthSydney – SutherlandGreater Sydney-13.6%
Sunshine NorthMelbourne – WestGreater Melbourne-13.2%
MittagongSouthern Highlands and ShoalhavenRest of NSW-13.0%
Ballarat CentralBallaratRest of Vic.-12.8%
Centennial Park (NSW)Sydney – Eastern SuburbsGreater Sydney-12.4%
WoollahraSydney – Eastern SuburbsGreater Sydney-12.0%
CowesLatrobe – GippslandRest of Vic.-11.7%
NaroomaCapital RegionRest of NSW-11.7%
ToorakMelbourne – InnerGreater Melbourne-11.6%