Falls in auction clearance rates in recent months indicate the skyrocketing prices of Australian homes may finally be returning to earth.
And while a less-feverish market means buyers face an easier time getting the property they want, falling demand also means that buying in the right area is even more important for owners who want the best return on what is the biggest investment most people will ever make – buying a home.
The downturn means the growth in the value of many properties will fall to single figures in the next year, experts say. But there are also suburbs that will maintain growth as high as 12 per cent.
As always with property, location is everything. Here, we reveal the suburbs forecast to make the most for their owners in the next year, based on an Australian Financial Review analysis of growth rates, median prices and average rental yields.
Nineteen of the top 20 suburbs forecast to earn double-digit growth in Australia during the next year are in Victoria.
This home in Glen Waverley is listed with an expected price of at least $1.85million. Properties in the inner eastern suburb of Melbourne are forecast to earn 12 per cent growth in the next 12 months
Nine of those suburbs are expected to earn growth of 12 per cent in the period for houses and units, including Glen Waverley, Mount Waverley, Balwyn, and Doncaster East.
Balwyn is mentioned twice in the top five suburbs to invest as both houses and units are expected to have 12 per cent growth. The median price for a house in Balwyn, a suburb in Melbourne’s inner east, is $1.85 million, while units have a median price of $760,000.
Experts say properties across all of the Melbourne metropolitan region had strong growth in the past year, and buying and selling was strong across all price points from prestige homes to the first home owners end of the market.
The four-bedroom home is in one of several suburbs in Melbourne where returns are expected to be the highest in Australia in the coming year
In the past year growth was strong in most suburbs across Melbourne and prices are expected to continue rising in 2016
New South Wales
The most extreme spike in the property boom of the last couple of years has been in Sydney, but there was been a dramatic slowdown since the market peaked around the middle of the year.
But key suburbs in Sydney and high-demand areas of New South Wales are still expected to perform strongly during the next year.
The north coast town of Byron Bay is expected to be among top performers, with growth of 12 per cent forecast. Other top areas include the Sydney suburbs of Bondi Junction, where growth is expected to be 9 per cent, Dulwich Hill (9 per cent), Rushcutters Bay (9 per cent) and Schofields (8 per cent).
The north coast town of Byron Bay is one of the places to purchase a property in mainland Australia, with an expected 12 per cent increase in return within a year
This four bedroom home in the coastal town of Byron Bay is listed for over $2.5million
The median house price in Byron Bay is $910,000. The expected return is perceived to surpass the popular eastern Sydney suburb of Bondi Junction
In Sydney, units in Bondi Junction are forecast to give investors among the strongest returns, with a median price of $975,000 and an expected return of 9 per cent. For houses, Dulwich Hill offers best value for money in Sydney, with a forecast return of 9 per cent on a median house price of $1.265million. Byron Bay’s return comes on a median house price of $910,000.
Experts say trophy properties will continue to be in demand in New South Wales, but prices are expected to be lower in 2016 and during the peak of the boom this year.
Australian Capital Territory
While investors won’t see returns on the same scale as the top areas of Victoria and New South Wales, there are still some Canberra suburbs where good growth is expected over the next year.
The five suburbs with the best forecast growth for the region are Weston, Chapman and Wright (all with 7 per cent), and Garran and Rivett (both 6 per cent).
Canberra had the nation’s highest auction clearance rates in the 12 months to the end of October, and an eight per cent gain on median house prices.
This five bedroom home in the Canberra suburb of Wright has an asking price of $more than 935,000. The area can expect seven per cent growth in the next 12 months
The contemporary family home sits within the second best suburb to invest in the ACT
Over the past 12 months to October 31 Canberra had the nation’s highest clearance rates with an eight per cent gain on median house prices
The Brisbane property market was hit this year by an oversupply of apartments in the inner suburbs that put a drag on prices and left the best-performing areas in the state outside the capital.
The best performers in 2015 were Cairns and the Gold Coast, as retirees relocated from southern states for the sunshine north of the border.
In Queensland, the top five suburbs to invest in property include Mermaid Beach, Burliegh Waters, Hollywell and Runaway Bay on the Gold Coast (all with 8 per cent growth forecast), and Mooroobool in Cairns (also 8 per cent).
Mermaid Beach on Queensland’s Gold Coast, where this home is listed with an asking price of $1.65 million, is expected to achieve eight per cent growth in the next 12 months
The four-bedroom and two-bathroom home is in Queensland’s top performing suburb
Cairns and the Gold Coast were the best performers in Queensland in 2015
South Australia’s broader economic woes, including sharp downturns in the mining and manufacturing sectors, is having an effect on the property market.
Still, properties in the right areas are forecast to achieve good growth.
Among the top suburbs in Adelaide is Broadview, where the median house price is just over $819,000 and owners can expect growth of 6 per cent in the next 12 months. The suburbs of West Lakes, Magill, Parkside and Beaumont are also expected to achieve 6 per cent growth.
The three-bedroom home in Broadview is listed for $484,500 and is expected to see a six per cent increase in value over the next 12 months
The stone fronted home is close to Adelaide Oval and all the necessary amenities
Despite South Australia being known for the worst employment rates in mainland Australia, property prices are still expected to increase
The end of the mining boom is also hitting Western Australia’s property sector, where growth will be significantly lower than in other regions.
The best five suburbs in Perth to invest in a property are Coolbellup, Rockingham, Highgate, Pinjarra and Aubin Grove, which are all forecast to show 3 per cent growth in the next 12 months).
The most optimistic forecasts expect prices to stay flat in 2016, and other experts are predicting house prices will fall by as much as five per cent.
Listed for $523,000 or nearest offer in Coolbellup the quirky and artistic property will see a three percent increase in value by the end of 2016
Prices in Perth are not expected to peak until 2017 and the most optimistic experts expect prices to stay flat in 2016
Darwin’s property market has also struggled this year as unemployment rises as a result of the dwindling mining boom.
But a recovery is forecast, with slow growth expected in 2016.
The best suburbs to invest in are Nightcliff, Stuart Park, Muirhead and Larrakeyah, which are all expected to have growth of 4 per cent.
The median house price in Nightcliff, one of Darwin’s most popular suburbs, is $840,000.
This four bedroom plus study two story fully air-conditioned home is listed for $1.125million in Nightcliff – a suburb seen as the best location in which to invest in the Northern Territory
Due to unemployment and the dwindling mining industry, Darwin, similar to Perth, did not see a dramatic increase in prices this year
Hobart continues to be one of the most difficult places to rent a property with vacancy rates sitting lower than one per cent.
For an expected five per cent increase over a 12 months period the best properties to invest in are Primrose Sands, Smithton, Hadspen and Taroona.
With a median house price at just over $500,000 Taroona is considered one of the most expensive suburbs to invest in.
Tasmania is one of the most difficult places to rent a property, with less than one per cent of homes on offer for renters
With a median house price at just over $500,000 Taroona in Hobart’s south, is considered one of the most expensive suburbs to invest in