Higher interest rates have impacted the borrowing capacity of most buyers, yet demand for homes has remained strong and home prices have continued to rise, especially in affordable suburbs.
During the pandemic period in 2020, the Reserve Bank of Australia reduced the cash rate to 0.1%, which was the lowest rate on record.
This drove up demand among buyers, who experienced a surge in borrowing power, resulting in one of the highest home price growth periods in history.
However, in May 2022, interest rates started to rise and were hiked 13 times to their highest level in 12 years. This rise has contributed to the ongoing decline in housing affordability across the country.
Despite the increasing difficulty of purchasing a home, home prices have continued to rise in most suburbs. More than three in four suburbs have experienced an increase in their median sale prices since the initial rate rise in May 2022, reflecting the resilience of the demand from buyers.
Nationally, median sale prices of houses have grown by 13% while median sale prices of units have grown by 7% over the 28 months but there are many suburbs in our cities where prices have increased by significantly more.
For houses, the Adelaide suburbs of Davoren Park and Elizabeth South led in terms of price growth. Since the initial rate hike, median sale prices rose by 82% and 79% respectively.
Parmelia and Camillo in Perth were close behind with houses now respectively costing 78% and 77% more than May 2022.
Houses in Elizabeth Downs and Elizabeth North in Adelaide also experienced strong growth in their house prices over the same period.
| Suburb | City | Current median sale price | % change since May 2022 |
| Davoren Park | Adelaide | $465,000 | 82% |
| Elizabeth South | Adelaide | $472,500 | 79% |
| Parmelia | Perth | $551,000 | 78% |
| Camillo | Perth | $533,500 | 77% |
| Elizabeth Downs | Adelaide | $460,000 | 74% |
| Elizabeth North | Adelaide | $424,500 | 73% |
| Orelia | Perth | $536,000 | 73% |
| Armadale | Perth | $510,000 | 73% |
| Hillman | Perth | $565,000 | 73% |
| Medina | Perth | $482,500 | 68% |
For units, the largest price growth was observed in Salisbury East in Adelaide, and Logan Central and Rochedale South in Brisbane. Median prices have grown by 91%, 74% and 72% respectively since May 2022.
Units in the Adelaide suburb of Findon and Brisbane suburbs Waterford West and Woodridge saw significant increases in price as well.
A majority of the top growth suburbs are in Perth, Adelaide, and Brisbane. Home prices in these cities remain below the national median and have been largely unaffected by rate rises due to their relative affordability.
| Suburb | City/Region | Current median sale price | % change since May 2022 |
| Salisbury East | Adelaide | $464,000 | 91% |
| Logan Central | Brisbane | $345,000 | 74% |
| Rochedale South | Brisbane | $568,000 | 72% |
| Findon | Adelaide | $600,000 | 72% |
| Waterford West | Brisbane | $401,500 | 71% |
| Woodridge | Brisbane | $350,000 | 67% |
| Goodna | Brisbane | $386,000 | 66% |
| Gosnells | Perth | $430,000 | 65% |
| Little Bay | Sydney | $1,362,500 | 64% |
| Kelmscott | Perth | $443,000 | 64% |
Consequently, a growing number of buyers, particularly investors, have opted to purchase homes in these cities, leading to higher property price appreciation.
Interest rates are forecast to fall by early next year which will be welcome news for buyers. While their borrowing power is anticipated to improve, rate cuts will also likely fuel further home price growth in the coming months.
