But now the heady heights of the pandemic boom has eased - the Reserve Bank is swiftly hiking rates, pushing many would-be buyers off the table at a time when the supply of properties for sale is rising.
And the downwards pressure on property price growth has now pushed median values in some suburbs even lower than what they were before the pandemic-induced boom - 51 suburbs to be exact, all of which are in NSW and Victoria, according to recent PropTrack data.
PropTrack's Home Price Index in August shows national home price growth has continued to fall from its peak last October.
Annual price growth is now just 5% - the lowest since the beginning of 2020.
In fact, Greater Sydney is the only region that recorded negative annual growth in prices, with the cost of property now 0.87% lower than the previous year.
Melbourne saw a similar trend, with home prices remaining unchanged (0% growth) over the same period.
7 suburbs with houses cheaper today than in March 2020
Unsurprisingly, units take up the majority of the list, with the list of suburbs where houses are now cheaper than pre-pandemic totalling just seven.
Interestingly, PropTrack points out that the regions with greater falls in home prices tended to be more expensive relative to others.
Houses in Rhodes, Balmain East, and Wollstonecraft in Sydney all had lower median sale prices year-ending July 2022 compared to March 2020.
Rhodes houses saw the biggest fall in values, with prices now 21.43% lower at $2.2 million than in March 2020 ($2.8 million).
Balmain East saw its values drop 9.46% to $2.51 million in July 2022, versus $2.77 million in March 2020.
Wollstonecraft houses saw a similar fate - house prices have dropped 8.61% to $2.70 million in July, from $2.9 million in March 2020.
The remaining four spots on the list are all suburbs located in Victoria - Caulfield East (down 8.83%), Clayton (down 4.97%), East Melbourne (down 2.92%) and Cranbourne South (down 1.19%) all also saw their house prices fall to pre-pandemic levels.
“These suburbs are among those with prices much higher than their capital city median, which supports the idea that demand for higher-end locations is weakening as mortgage repayments increase,” Megan Lieu, economic analyst at REA Group, explained.
Here’s the full list:
45 suburbs with units cheaper today than in March 2020
Compared to the number of suburbs on the list for houses, the number of suburbs where unit prices are lower than pre-pandemic times is considerably larger and a lot more varied in terms of cost and location.
This is likely due to the fact that unit prices grew less than houses since the beginning of the pandemic, Lieu points out.
Of the 45 suburbs listed, 21 are in NSW and 24 are in Victoria.
And Balmain East makes the list again in third place with the prices of its units dropping a huge 23.82% between March 2020 and July 2022 - the median unit price for the suburb is now $1.12 million.
The top spot on the list, however, went to another NSW suburb - unit prices in Beecroft have dropped 40% over the same period to just $840,000, from $1.4 million in March 2020.
Albert Park in Victoria was in second place with its unit prices falling 25.23% to $822,500 over the pandemic period.
Haymarket, Beaconsfield and Eastwood in NSW were other suburbs which saw their unit prices fall over 20% (-21.97, -21.80% and -21.53% respectively) to a new, much lower, median.
Kingsbury, Aberfeldie and Canterbury, all in Victoria, weren’t far behind with prices dropping 17.92%, 17.18% and 17.08% respectively over the same period.
Here’s the full list:
Suburbs where unit prices are lower than pre-pandemic
Planning to invest? Remember this
While this is an interesting list to look over, these aren’t areas where I’d recommend investing.
Because despite these areas being where prices have dropped versus prior to the beginning of the Covid-19 pandemic, this isn’t enough alone to warrant a good investment opportunity.
Volatile suburbs where properties suffer huge price falls will always be that way so don’t get lured into thinking you’re getting a bargain.
Also, don’t expect investment-grade returns from secondary locations and properties.
Location, location, location
By now you would know that location will do about 80% of the heavy lifting of a property’s capital growth.
And not all locations are created equal.
Some suburbs will be more popular than others, some areas will have more scarcity than others and over time some land will increase in value more than others.
That’s why it’s important to buy your investment property in a suburb that is dominated by more homeowners, rather than a suburb where tenants predominate.
And you’ll find suburbs where more affluent owners live will outperform the cheaper outer suburbs where wages growth is likely to stagnate moving forward.
This is because the more established suburbs with better infrastructure, shopping and amenities tend to be close to the CBD and the water and that’s where the wealthy want to and can afford to live, and they’re prepared to pay a premium to live there.
Overall, by focusing your research on what those often overlooked owner-occupiers are doing, you may just find an investment that outperforms the market and delivers strong value and growth over the long term.
