Suburbs within 5km of the CBD that are cheaper this year

As property prices have come off the boil, trendy inner-city suburbs across the country have got cheaper.

In some premium postcodes, buyers are paying hundreds of thousands of dollars less than they would have a year ago while in other suburbs, a lack of stock for sale is holding prices steady.

It is well documented that in heating and cooling property cycles, the areas that lead a market boom will typically lead the downswing. This partly explains the falls in some of the country’s most prestigious neighbourhoods.

According to Domain Group data, the median house price in Sydney’s Cremorne has fallen 23 per cent in a year to $2.52 million while Toorak’s median house price is at $4,737,500 – down a substantial 17 per cent.

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It is worth noting that many inner-city suburbs remain financially out of reach for everyday Australians – even after recent price falls. However affordability has recently improved in city fringe suburbs such as Spring Hill in Brisbane, and Redfern in Sydney.

And with speculation growing that interest rates will soon stabilise, some buyers are trying to pick the bottom of the market – a tricky task, even for the most seasoned property experts.

“If you’ve picked the bottom of the market, it’s already on the way up,” noted real estate agent Rick Daniel, of Nelson Alexander. 

Sydney

A swath of suburbs within five kilometres of the Sydney CBD are more affordable in 2023, according to Domain data.

The most significant price decreases were seen in the affluent suburbs of Cremorne and Cammeray, where house prices have fallen 23 per cent and 16 per cent respectively.

At the cheaper end of the scale, Camperdown’s median house price dropped 14 per cent to $1,655,000, Redfern prices fell 11.3 per cent to a $1.65 million median while Erskineville’s median price came down to $1.58 million.

Real estate agent Hayden Richards of Ray White said prices came down quickly in the wake of the first interest rate rises last year, which followed a market boom during the pandemic. 

“There was definitely some good buying opportunities at the end of last year,” he said. “Obviously borrowing capacity is coming back with each interest rate rise but because of how much prices dipped at the end of last year, there’s not a lot of stock on the market.”

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56 Union Street, Erskineville NSW 2043

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First-home buyers eligible for grants and young families make up the majority of home buyers in Redfern, Richards said but added “it was still a tough price point”.

 “What people are scared of is if their pre-approval lapses, their borrowing capacity will be less.”

The top end of the market was still performing really well, Richards said. “It’s not as hot as it was last year but in terms of the buyers, there’s still a lot of confidence.

“It’s the $1 million to $1.8 million price [bracket] that are struggling a little bit.”

Melbourne 

Although the largest inner-city price falls in Melbourne were reported in Toorak and South Yarra, prices have also edged lower in Melbourne’s inner north.

Homes in Carlton, Carlton North, Fitzroy and Fitzroy North are all cheaper this year. A price fall of just 3 per cent has shaved off more than $50,000 from the average home in Carlton North.

Nelson Alexander’s Rick Daniel said buyers were competing against fewer people than they were a year ago.

“I say this to buyers all the time: traditionally, inner-city properties don’t get considerably cheaper. They get easier to buy.

“In recent times, what we’re observing … is the houses that are needing renovating and improvement are the ones representing better buying opportunities.”

Long-term investors who have enjoyed substantial capital growth over many years are selling up due to the recent changes around rental property compliance and land tax, Daniel said.

But buyers are still treading cautiously in the economic environment. “There is a fair bit of apprehension among buyers who are motivated but don’t want to feel like they’re paying more than they should,” he said.

Brisbane

Prices in Brisbane’s inner city have held firmer than in Sydney and Melbourne over the past year.

Unlike most other suburbs on the Brisbane city fringe, Spring Hill offers a median house price under $1 million, with house prices slipping almost 13 per cent in a year. Other inner-city suburbs that are now cheaper than they were in 2022 include esteemed Hawthorne and East Brisbane.

Ray White’s Dean Yesberg said the inner-city housing market was still performing strongly. “What we’re finding is for houses, there is no difference in the marketplace. There is a shortage of houses.”

He said rising interest rates were not having a major impact on most home owners.

“Most people in these inner-city suburbs have been through the ’90s when interest rates were 18 per cent so 4 per cent or 5 per cent doesn’t hurt them.

“The apartment market is slightly different. The inner-city apartment market didn’t see the boom that the housing market did in the last three years. They’re now, compared to houses, very good value.”

Units in Brisbane’s inner east and west have become more affordable. Prices have come down in Highgate Hill by a sizeable 12.3 per cent, while most other suburbs held steady or only dropped by 1 or 2 per cent.

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63 Wedd Street, Spring Hill QLD 4000

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Patrick McKinnon of Place Ascot said there was a shortage of apartments for sale, and strong demand fuelled by the housing crisis. Parents were buying apartments for their children to live in because they couldn’t find a place to rent, he said. 

“Five years ago, we had an oversupply of apartments,” he said. “Now we have an undersupply.

“Young owner occupiers cannot afford to buy a house within five kilometres of the city. If your budget is … $400,000 to $800,000, units represent good value.”

Adelaide

While the city’s overall median house price tracked upwards throughout 2022, prices dipped in a few suburbs within 2.5 kilometres of the CBD.

In Unley, houses are now fetching 4.4 per cent less than they were a year ago. However the median remains high at $1.1 million.

According to Domain data, units in North Adelaide fell 7.5 per cent, with the median now sitting at $462,500.

Perth

Units in Como in Perth’s south-east are trading for substantially less than last year, as are apartments in Mount Lawley and Victoria Park.

West Perth’s housing market took a minor dip, with the median house price now $471,000.