The smaller capital city markets of Adelaide and Brisbane are set to be the top-performing property markets of 2023 according to a new report.
Canstar’s Rising Stars Report predicts the smaller capital cities will be the best opportunities to pick up a “bargain”, while some of the hottest locations of the past few years will continue to soften.
The report found Adelaide was the best location to invest for 2023, followed by Brisbane and Perth.
While Hobart, Sydney, Melbourne and Regional Tasmania would likely struggle as the overall housing market pulled back from the recent boom.
Report co-producer Terry Ryder said last year regional areas dominated the top three locations to buy but this year it’s the smaller capital cities that shine.
“All three markets have been strongly resistant to the downturn pressures and have benefited from the pursuit of affordability, which is the strongest theme pervading property markets across Australia in 2022,” Mr Ryder said.
Mr Ryder said Adelaide had been at the forefront of price growth nationwide for the past two years and continued to have one of Australia’s busiest and most competitive property markets, with homes selling quickly at higher-than-expected prices.
“It has been one of the markets most resistant to recent downturn price pressures and is now the top-ranked market in Australia, up from ninth last year,” he said.
“Previously regarded as a city that failed to deliver growth in its economy, population and property prices, Adelaide has been transformed by significant changes in its economy.”
Mr Ryder said there were still good suburbs in Adelaide for investors including Christie’s Beach, Craigmore, Dover Gardens, Elizabeth Vale, Gilles Plains, Kurralta Park, Magill, Munno Para, Salisbury East and Seaford Meadows.
According to Mr Ryder, Regional Queensland has dropped slightly from second to fourth but the outlook is still promising.
“As the nation’s leading recipient of population growth from internal migration, it continues to benefit from the ‘exodus to affordable lifestyle’ trend,” he said.
“Places like Bundaberg South, Caloundra, Newtown and South Toowoomba made the list among others.”
Mr Ryder said the sharpest decline in the rankings for property markets has been in NSW, both in Sydney – which dropped from fourth to 12th – and in Regional NSW, which fell from first to seventh.
“This has coincided with a notable drop-off in the state’s economy,” he said.
“Sydney and many of the high-profile regional markets have become very expensive locations for housing in the recent boom and it is the top-end markets that have declined noticeably.
“Suburbs making the list in Sydney included Campsie, Fairfield, Georges Hall, Granville, Jamisontown, Liverpool, Lurnea, Marrickville, Rooty Hill and Westmead while regionally in the state it was places like Armidale, Dubbo, Glen Innes, Goulburn, Muswellbrook and more.”
Mr Ryder said Canberra was another very expensive city for housing and has dropped down the rankings from fifth to ninth along with Melbourne and Tasmania.
“Melbourne – one of the country’s biggest and priciest capital cities – is second last in the rankings, dropping two places from 11th last year to 13th now,” he said.
The areas standing out in Melbourne are Caroline Springs, Epping, Forest Hill, Glen Waverley, Hoppers Crossing, Melton South, North Melbourne, Richmond, Roxburgh Park and Sunbury.
“In last place is Regional Tasmania, which after a prolonged boom, the regional property market in the island state has passed its peak,” Mr Ryder said.
“Top places in regional Tassie are Brighton, Devonport, Invermay, New Norfolk and Youngtown.”
Canstar’s Editor-at-Large, Effie Zahos said Australia’s property market was unlikely to see the rapid growth in prices experienced over the past couple of years.
“Bargains may be just around the corner with some forecasts predicting price drops of up to 20 per cent,” Ms Zahos said.
“But not all bargains will get you the same gains.
“Whether you plan to wait a while to buy and hopefully snap up a bargain or you’re ready to jump into the market now, the number one rule when it comes to buying property hasn’t changed.
“You’ve got to get your location right!”
Ms Zahos said rising interest rates are making property more expensive and focusing on affordability is going to be important going forward.
“If you can block out all the noise around whether or when house prices might fall and buy well based on location and affordability, property is still a great way to build wealth over the long-term,” she said.