The past four years in the property market have been incredibly volatile, with prices surging, before falling sharply then rising rapidly once again.
Despite the ups and downs, prices are higher than four years ago in almost every Australian suburb, PropTrack data shows, with the pandemic boom and the surprising run of growth over the past year largely outweighing the dent in the market caused by rising interest rates.
In most suburbs, price growth over the past four years has massively exceeded that of the previous four years, the data shows.
For those who hung on through the pandemic ups and downs, they’ve largely come out well ahead.
Homeowners in many areas — especially across regional Australia and affordable fringes of some capitals — have had their fortunes transformed by a huge jump in values driven by surging demand.
Jump ahead to see where home prices rose the most in the past four years.
PropTrack economist Anne Flaherty said conditions during the pandemic triggered a once-in-a-generation boom, driven primarily by very low borrowing costs and lifestyle changes.
“The level at which property prices rose in 2021 in particular was the fastest episode of price growth seen in over 30 years,” she said.
“It’s unsurprising that property prices increased when interest rates decreased so much.”
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In New Farm, where this house sold for $2.3 million, prices rose 92% over the past four years, compared to just 6% over the four years prior to the pandemic. Picture: realestate.com.au/sold
But with interest rates having risen rapidly since then and remaining high, the effect of borrowing costs on price growth has diminished, given the nation faces a shortage of housing in the face of surging population growth.
“We’re now in the reverse situation where not only have interest rates increased but they’re sitting well above pre-Covid levels,” Ms Flaherty said.
“Demand from buyers is exceeding the supply of properties for sale.”
“That means the impact of interest rates is not as strong as it has been in the past.”
Suburbs in Sydney’s north west like Rouse Hill have recorded some of the city’s strongest price growth over the past four years. Picture: realestate.com.au/sold
Instead of discouraging buyers from entering the market, high borrowing costs have altered buyer behaviour and helped fuel price growth in areas where property prices are relatively more affordable.
“With property prices sitting at record highs in many places, and with interest rates still incredibly high, more buyers are being priced out of a lot of different suburbs,” Ms Flaherty said.
“More buyers are looking to those more affordable areas and that’s increasing demand.
What happened in the property market in the past four years?
Despite initial fears that the pandemic would severely crash the market, prices surged as interest rates were slashed to record lows to prop up the economy.
“Interest rates were at incredibly low levels which massively increased borrowing capacities,” Ms Flaherty said.
More time at home allowed people to reassess their housing and lifestyles, and a surge in the household savings rate further boosted budgets, Ms Flaherty said.
“Essentially this gave people a lot more money to work with to fund the lifestyle they wanted,” she said.
Unit prices have almost doubled in the past four years in Sunshine Beach near Noosa, growing in value more than twice as fast as the previous four years. Picture: realestate.com.au/sold
The broad uplift in values turned some homeowners into millionaires, and with remote working liberating millions of people from offices, regional Australia took centre stage.
“Without that restraint of being close to your physical workspace, people started looking further afield,” Ms Flaherty said. “That’s why we really saw that push towards regional areas.”
Demand from hoards of tree changers caused record price growth in suburbs and towns outside the capitals, but the double-edged sword of booming values locked out many locals as cashed-up city buyers bought up properties.
In the cities, lockdowns caused many to seek out big homes further from the CBD, while units fell out of favour for many.
In the past four years, prices grew 77% in Bayview in Sydney’s north, where this five-bedroom house on a one-acre block sold for $8.75 million last year. Picture: realestate.com.au/sold
But with the economy rebounding strongly as the pandemic waned and high inflation taking hold, interest rates were increased 13 times starting in May 2022, reducing borrowing capacities by about 30% as home loan repayments surged.
Although the market cooled, with reduced demand and fewer properties for sale, the downturn didn’t last as long as many predicted, and in some parts of the country, prices didn’t fall at all.
Despite high interest rates, strong population growth and a housing shortage put upward pressure on prices, and by late 2023, Australia’s median house price reached a new record, surpassing the previous high reached just before rates were hiked.
Where home prices rose the most in the past four years
Adelaide dominated the top ten list nationally, with house prices more than doubling in Elizabeth North (up 151%), Davoren Park (up 142%) and Smithfield Plains (up 132%), where a typical house sold for less than $200,000 four years ago.
In nearby Salisbury, unit prices rose 83%.
Adelaide real estate agent and Edge Realty principal Mike Lao said the surge in the area was initially driven by investors seeking solid returns with minimal capital outlay.
“All of the properties up north were returning 5-6% back then,” he said. “You could borrow at 2% and be positively geared.”
More recently, a shortage of rental properties has encouraged more first-home buyers to enter the market, attracted by affordable prices amid high borrowing costs.
“It’s still affordable and good value, and everyone is wanting to get in,” Mr Lao said “We’re still a couple of hundred grand below the median price of Adelaide.”
“We were a bit of a secret before, but the secret’s out.”
This three-bedroom Elizabeth North house sold for $510,000 in January, only eight months after selling for $400,000, growing in value by 27.5% in that time. Prior to that, it last traded for $190,000 in 2017. Picture: realestate.com.au/sold
In Perth, affordable suburbs like Camillo (up 114%) and Armadale (up 105%) were also priced around the $200,000 mark four years ago, but median prices in most of the strongest performers are now priced between $400,000 and $500,000.
Regional locations also performed well across each state, particularly in coastal areas of Queensland where prices have more than doubled in the past four years.
On the Sunshine Coast, house prices are up 113% in the past four years in Mount Coolum and up 100% in Coolum Beach.
“We’ve been undervalued for a long time in comparison to Noosa, Sunshine Beach and Mooloolaba,” said real estate agent Mark Lawler of Richardson and Wrench Coolum Beach.
“Our beaches are just pristine, but we’re still relatively affordable.”
House prices in Mount Coolum have more than doubled since the pandemic began. Picture: realestate.com.au/sold
Prices for houses have also doubled in Gold Coast suburbs like Hope Island (up 103%) and Biggera Waters (up 97%), while Main Beach unit prices rose 83%.
In regional Victoria, house prices surged in Warracknabeal (up 105%) Terang (up 98%), and Myrtleford (up 93%), while several regional NSW towns and suburbs posted triple-digit growth rates, including Ashmont (up 116%), Wellington (up 114%) and Greta (up 111%).
Most of the Victorian towns were house prices grew the most were in regional areas and had affordable prices, like Warracknabeal, where this four-bedroom period home sold for $420,000 in May last year. Picture: realestate.com.au/sold
The outperformance of regional areas highlights not only the surging demand that regional areas experienced during the pandemic, but also challenged affordability in recent years with high interest rates pushing buyers towards areas where homes offer better value.
Meanwhile, several towns supporting Western Australia’s mining industry have had huge increases in property prices — like Port Hedland where unit prices jumped a whopping 179% after falling 29% over the previous four years — with demand for homes surging amid the state’s latest resources boom.
Affordable suburbs have also attracted increased interest from investors seeking strong capital growth and high rental yields, with this added demand perpetuating price growth.
Ms Flaherty said high rental prices and a shortage of homes had attracted investors expecting further growth, while low vacancy rates have made investing less risky.
“People recognise the fact that Australia’s population is growing at record speeds and we’ve seen a slowdown in the rate at which homes have been built,” she said.
“The reason we’re starting to see investor activity make a comeback is investors realise we’re heading down a path of worsening undersupply, with the implication that prices are likely to rise.”
It’s a slightly different story in the east coast capitals. While values have climbed higher in many outer suburbs offering relative affordability, it’s not just the cheapest suburbs where prices grew the most over the past four years.
Brisbane’s strongest performers for house price growth are split between pricier inner suburbs, such as Balmoral (up 94%), New Farm (up 92%) and Hawthorne (up 90%), as well as suburbs of Ipswich like Riverview (up 100%), and outer northern suburbs such as Upper Caboolture (up 96%).
This recently built home in Balmoral, one of Brisbane’s inner suburbs, sold for $2.38 million last year. Prices in the suburb have almost doubled over the past four years. Picture: realestate.com.au/sold
In Sydney, the suburbs with the strongest growth include pricey suburbs in the east like Dover Heights (up 97%) and Vaucluse (up 80%), but most of the strongest performers are found further from the city, including Sylvania Waters (up 95%) in the south, Bayview (up 77%) in the north and Caddens (up 85%) and Leppington (up 84%) in the west.
The strong growth seen in premium suburbs is likely explained by the scarcity of homes in ultra-premium suburbs, as well as increased upgrader activity, Ms Flaherty said.
“For those people who do own property, and have owned for more than four years, they’ve often seen very significant rises in the value of their home,” she said.
“The amount of useable equity they have has increased. It’s one of the reasons we’ve seen property prices remain so resilient.”
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Prices also surged in many suburbs of the Central Coast, which offers a coastal lifestyle for less than equivalent beachside suburbs in Sydney. Copacabana (up 89%), Long Jetty (up 79%) and North Avoca (up 76%) were the strongest performers there.
Copacabana real estate agent Trudy Baron of Change Property attributed the suburb’s strong price growth to its community vibe.
“We had a massive jump towards the end of Covid,” she said. “People were looking for a sense of community.”
“We have restaurants, cafes and a bar, chemists, doctors and supermarkets, but it’s not really busy.”
“You can walk basically from any property to the beach. A lot of the homes have ocean views or ocean glimpses.”
Houses in Copacabana on the Central Coast have doubled in four years, but are still on par with many Sydney suburbs. This three-bedroom home with expansive ocean views sold for $1.8 million last year. Picture: realestate.com.au/sold
Most of Melbourne’s top performing suburbs of the past four years are located on the Mornington Peninsula, despite a pullback in prices in the region over the past year.
Prices in suburbs such as Blairgowrie (up 72%), Somers (up 67%) and Rye (up 60%) are still much higher than four years ago, demonstrating the strength of the boom seen during the pandemic as thousands of city buyers empowered by remote working flocked there seeking a lifestyle change.
Real estate agent and Fletchers Mornington Peninsula managing director Josh Callaghan said most of the price growth that the area experienced was compressed into an 18-month period from late 2020 onwards, after first lockdowns ended.
House prices in Blairgowrie are still 72% higher than four years ago, despite prices on the Mornington Peninsula falling a little since interest rates started rising. Picture: realestate.com.au/sold
“There was a big demographic who wanted to get out of the city areas and bring the kids up in a much more comfortable lifestyle by the coast,” he said.
While the jump in interest rates caused prices to pull back, Mr Callaghan said high building costs have pushed buyers towards pricier turnkey homes at the expense of properties needing work.
“There’s been an uplift in buyers appreciating quality,” he said. “Brand new homes of a very good quality have been highly sought after.”
How the past four years compares to the previous four years
Most suburbs experienced much stronger growth during the past four years compared to the four years prior to March 2020, when property prices trended downwards amid lending restrictions and a period of heightened uncertainty.
Prices had peaked towards the beginning of that four year period, fuelled by surging investor activity which culminated in the share of investor lending exceeding 40% in early 2017.
But when the Australian Prudential Regulation Authority (APRA) restricted investor and high risk lending, and lenders increasingly scrutinised home loan applications amid the banking royal commission, property market activity slowed and prices fell.
In the four years prior to the pandemic, property prices peaked, before falling amid tightened lending conditions then recovering again as conditions eased and confidence returned. Picture: Peter Ristevski
Prices bottomed out around the 2019 federal election, when heightened uncertainty around Labor’s proposed changes to negative gearing caused many buyers to hold back, fearing values would fall further if the tax break was removed.
But from mid-2019, a series of changes by the banking regulator to the lending landscape turned things around, with the RBA also cutting rates three times.
Meanwhile, first-home buyers were offered low-deposit loans while avoiding lenders mortgage insurance through the First Home Guarantee, and a coalition election victory put the negative gearing issue to bed.
Those changes put more money in buyers’ pockets and boosted confidence, setting the stage for the boom that followed in late 2020.
