Feb 19, 2020 – 3.02pm
Home values in the cheaper, outer ring suburbs are closing in on the inner city prestige markets, growing by as much as 14 per cent in value since June on the back of rampant demand from first home buyers.
While the higher end of the market still broadly leads the growth spurt in Sydney and Melbourne, many suburbs at the lower end of the price spectrum have recovered strongly since the market bottomed out nationally last June.
Homes in outer ring suburbs like South Penrith in Sydney have surged in value amid strong first home buyer demand. Wolter Peeters
CoreLogic data exclusively compiled for The Australian Financial Review showed the outer west and Blacktown regions in Sydney dominated the high performers, led by Warragamba with 14.3 per cent house price growth.
Other suburbs on Sydney’s fringes that showed good house median house price growth included: South Penrith, which rose 13.4 per cent to $628,045; Lalor Park, which climbed 13.2 per cent to $678,059; North St Marys, which rose 13.1 per cent to $565,523; and Emu Plains, which gained 12.8 per cent to $674,986.
Even with the strong growth, however, values were still well below the Sydney median house price of $994,300.
Eliza Owen, CoreLogic’s head of research for Australia, said affordability was a big factor for the solid recovery in these areas.
“The typical suburb median values of these areas were significantly below the lower quartile value of the broader capital city region,” she said.
The Housing Commission homes are getting sold and bringing a different type of people in the [Campbelltown] area.
— Victor Kumar, buyers agent
“As mortgage rates hit record lows and first home buyers remain relatively elevated as a portion of market participation, there may be high demand for select, affordable markets,” she said.
While the suburbs are located quite a distance from the Sydney CBD, they are within proximity of high economic activity centres such as the airport development at Badgerys Creek, which is expected to generate 23,000 jobs by 2036.
“People are already starting to notice the scale of the development and its potential impact on housing,” said Victor Kumar, buyers agent with Right Property Group.
“I think that’s the biggest driver that will continue to push price growth.”
Improvements in transport links have also made the areas more attractive to professionals working in the city.
“The express trains from Campbelltown to the city only takes 35-40 minutes, so white-collar city workers are increasingly moving out to these areas,” Mr Kumar said.
“As more higher income professionals are relocating to Macquarie Fields, Penrith and Campbelltown, these areas are becoming more affluent and desirable.
“There is a huge demographic shift happening. The Housing Commission homes are getting sold and bringing a different type of people in the area.”
In Melbourne, home prices in the outer suburb of Narre Warren also surged amid growing demand for affordable homes within commuting distance to the CBD.
Since June last year, the median unit price jumped 13.1 per cent to $427,180.
Located 38 kilometres south-east of the Melbourne CBD, Narre Warren has a vibrant local economy. It has a railway station and is home to Westfield Fountain Gate, the second-largest shopping centre in Australia by gross leasable area.
Another Melbourne commuter suburb, Beveridge, also racked up strong growth of 10.1 per cent in house values during the same period.
Located 59km north of Melbourne, the suburb is rapidly changing amid a new housing development in the area.
In Queensland, Boonah and Fernvale notched up the strongest gains, with median house prices rising by 8.2 per cent and 7.7 per cent respectively in the suburbs which are close to the Ipswich region.
Located 40km west of the Brisbane CBD, Ipswich has long been targeted by investors looking for healthy cash flow. Since 2015, an array of new housing developments in the area have also lifted median values.