Even in the most expensive suburbs in Australia, there are neighbourhoods where homes can sell for much more affordable prices than surrounding properties.
PropTrack data shows that every suburb contains both pricey pockets where homes command a huge premium, as well as areas where homes tend to be cheaper.
Analysing home values by SA1 regions — which are small areas within a suburb comprising a few streets – shows that savvy buyers can potentially find relative bargains in even the priciest suburbs in Australia.
The analysis also reveals the pockets within a suburb that have the highest prices, showing just how much wealthy buyers are willing to pay for a blue-ribbon address.
Jump ahead to see the suburbs where property values vary the most.
What makes a pricey pocket so expensive?
The individual advantages of a local neighbourhood can be big drivers of property values in premium pockets, said REA Group executive manager of economics Angus Moore.
“Lots of factors go into why an area can be more expensive, or more affordable,” he said.
“Local area features are obviously a key driver – things like water views or water frontage – can make a very big difference to home prices.”
Beachside pockets are almost always the priciest in coastal suburbs. Homes in this tightly-held enclave of Manly are typically worth more than $14 million. Picture: Getty
Homes within walking distance of shops, cafes and transport infrastructure can be more valuable relative to others in the same suburb.
Properties within well-regarded public school catchments, or close to prestigious private schools, may trade for more than homes just a few streets away.
The characteristics of homes within individual neighbourhoods can play a part too.
Quiet, tree-lined streets with large homes are often among the priciest pockets within a suburb. Picture: realestate.com.au/sold
Even within the same suburb, streets filled with large, prestigious homes can command higher prices than areas with more modestly-sized dwellings.
Buyer’s agent Cate Bakos said buyers were typically willing to pay more for conveniently-located properties with pleasant streetscapes.
“An attractive dwelling in a really nice street that has high amenity – that's always the trifecta,” she said.
What makes an affordable pocket cheaper?
On the flipside, homes further from a suburb’s most desirable features may be more affordable.
For example, in a coastal suburb, properties further from the beach tend to get cheaper, although water views from elevated positions could potentially negate this effect.
In some cases, homes further from train stations, motorways or a suburb’s main access roads might be cheaper too, as this can potentially increase commuting times for workers.
However there are times when proximity to transport can negatively affect property values, particularly when it comes to noise.
Some pockets of Paddington in inner Brisbane have more affordable prices than elevated areas with views. Picture: realestate.com.au/sold
A recent PropTrack report found that transport noise, particularly from planes and vehicles, could make homes up to 18% cheaper than surrounding properties.
Flood risk can also negatively affect property values, according to another PropTrack report, although that study found the effect on prices could be outweighed if buyers place greater value on the benefits of a waterfront position or coastal views.
Pockets of a suburb where blocks of land are smaller, streets are narrower or houses are older can be cheaper than areas where properties are more spacious and modern.
Apartments in densely-built pockets can be more affordable as a high supply of homes gives buyers more choice, although in some cases this could be outweighed by better access to transport.
High-density pockets where apartments are smaller may have more affordable prices than areas where larger apartments in smaller blocks are more common. Picture: realestate.com.au/sold
Ms Bakos said properties on main roads were typically cheaper, but this compromise could hurt resale value.
“Some people will say ‘I don’t care, I just want to be in the suburb’, but invariably it can get to a lot of people, whether it’s the noise, safety issues with kids, the dust, or even just parking and driving in and out.”
Ms Bakos said buyers should pay careful attention to zoning, as banks may restrict the amount that can be borrowed to purchase homes with commercial or industrial zoning, and these quirks may deter future buyers.
“You don't want to buy into a property that's zoned in a way that lenders don’t like,” she said. “You can have a massive lending headache, and even if you don't, your future resale potential is tougher.”
Suburbs where property values vary most
PropTrack data shows that the suburbs with the largest variation in median values between the cheapest and the most expensive pockets tend to be some of the priciest suburbs in the country.
These suburbs often have a wide range of housing types, from opulent mansions to modest townhouses or semis.
The wealthiest buyers with the biggest budgets hone in on the most desirable neighbourhoods within a premium suburb, pushing up prices for properties with the largest blocks, the quietest streets or the best views.
That creates a big price difference between these sought-after pockets and areas where homes may be smaller, denser, near main roads or lacking views.
In Vaucluse in Sydney’s east, there is an $11.7 million difference between median values in the priciest pocket, where many multimillion-dollar mansions have gunbarrel harbour views, and the cheapest pocket (albeit with a $3.9 million median value), where smaller homes are surrounded by apartment blocks.
Sydney's Vaucluse has one of the priciest pockets in the nation with a $15.5 million median value, and these harbour views are a big part of the reason why. Picture: realestate.com.au/sold
In Melbourne's Toorak, the priciest pocket includes mansions in private walled compounds that typically have tennis courts and pools. Here, the median price is $13.2 million - a huge premium compared to its cheapest pocket where the median house price is $2.2 million, with smaller homes on tightly-packed streets near the train line tending to be more affordable.
A waterfront pocket of Palm Beach on the Gold Coast has a $9 million median price, owing to direct beach access and redevelopment potential, but low-rise family homes a few streets back from the beach can be found for less than $1.8 million.
High-end suburbs often have pockets of affordability in the unit market, typically in areas with a high concentration of smaller or older apartments positioned further from amenities.
Harbourfront Mosman in Sydney has several pockets with sub-$800,000 unit prices along its main roads, where apartments are much more affordable than the suburb’s overall $1.2 million unit median. By contrast, apartments in the suburb's priciest pockets can cost more than $5 million.
Palm Beach on the Gold Coast has a huge price difference between luxury beachfront properties and more humble homes just a few streets back. Picture: realestate.com.au/sold
In Brighton in Melbourne’s south east, house values are highest near the water, while units near the suburb’s main shopping strip are pricier than surrounding streets.
“Brighton is very much about the west of St Kilda Street,” said local real estate agent Nick Johnstone. “It's called the ‘Golden Mile’.”
“Then you’ve got the middle Brighton section, which is the most popular part at the moment. People want to be near amenities and they want to be able to walk to the shops.”
Mr Johnstone said there was a massive difference in home values across the suburb, with properties closer to the suburb’s busier roads typically more affordable.
Can some compromises pay off?
Although higher prices may indicate pricey pockets are the most desirable areas within a suburb, challenged housing affordability and high interest rates suggest these aren’t necessarily the areas where buyers are flocking.
Mr Moore said more buyers have been looking in more-affordable areas recently, leading to stronger price growth.
In Brighton in Melbourne's south east, pockets that are further from the beach and closer to the highway are more affordable. Picture: realestate.com.au/sold
“One of the trends we've seen in recent years is that more affordable areas have, on average, done a bit better,” he said.
“That's consistent with the very challenging state of housing affordability we're facing, and buyers looking to manage that by looking in more affordable areas.”
“That's been true again this year following the three rate hikes we've seen from the RBA. The more-expensive end of the market has seen softer prices than the more-affordable and mid-market segments.”
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Ms Bakos said in many cases it can be wiser to compromise on the physical dwelling itself rather on the land or the location.
“As long as your land is good, you can work with the house,” she said. “If it's run down or daggy, as long as it can work for you now, that is a good compromise to make.”
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