Top 10 performing capital city suburbs

Founder and Publisher of the Switzer Report
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Australian house prices have improved marginally in recent months amid low interest rates and improved stock market performance, but home buyers remain hesitant to jump in with the fervour that characterised the pre-Global Financial Crisis era.

Prices across the capital cities edged up by 0.5% in the second quarter of this year, but were still down 2.1% from a year earlier, Australian Bureau of Statistics (ABS) data show.

This correction towards growth is likely to continue as financial markets and consumers put the worst of eurozone and US economic growth fears behind them. But until the global economy can confidently declare economic and financial stability to be safely back, investors will continue to tread cautiously.

The latest housing finance data confirmed a lingering sluggishness among homebuyers. New lending to owner-occupiers dropped by 1% in July from a month earlier, even with seasonal adjustment taken into account for the quieter winter market. Housing finance was up a subdued 2% from a year earlier, ABS figures showed.

But economist see some support for mortgages in the coming months as the interest rate cuts from May and June – which brought the benchmark cash rate down by 75 basis points to 3.5% – begin to impact consumer behaviour. Likewise, many economists expect to see another interest rate cut in the coming months, particularly with the Australian dollar being driven higher by wide interest rate differentials with the rest of the developed world.

But while the broader market may be subdued, investors are itching to spend and it’s driving up prices in suburbs that investors see long-term value.

Not surprisingly, many of these suburbs lie on the more affordable outer edges of capital cities, such as Sydney’s Eastern Creek, Brisbane’s Clear Mountain and Melbourne’s Wandin North.

Sydney prices in particular have been leading the market amid steady demand and employment.

So while average prices on a national level will need encouragement to deliver solid gains in the coming months, there are numerous hot pockets of capital growth supporting investors’ hunger for property with good returns.

Below are the latest Residex data showing the top 10 performing suburbs for house price growth in major Australian capital cities in August.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Anyone should consider the appropriateness of the information in regards to their circumstances.

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