The 23 suburbs where prices doubled in three years

Values have skyrocketed in these affordable hotspots, but big changes in the property market will test whether demand can keep outstripping supply.

A handful of affordable suburbs have blown away the rest of the market, with values rising faster than anywhere else in the past three years.

There were 23 suburbs where median home prices doubled in just 36 months, according to the latest PropTrack data.

Scattered mostly across Queensland and West Australia, many of these suburbs have recently been battlegrounds between investors targeting capital growth and strong rental returns, and first-home buyers hoping to get a foothold in the market.

Despite intense competition rapidly driving prices higher, affordability was the common thread linking most of these rapid growth suburbs.

A third of the suburbs had median prices below $700,000, with lower property prices forming a big part of the appeal to first-home buyers and investors.

Many of these rapidly rising suburbs were found in Brisbane’s Logan region and outer Perth – affordable pockets of two of the strongest capital cities for home price growth recently.

Suburbs where house prices doubled in three years

But things have started to change, and what were once some of the nation’s hottest housing markets have now cooled.

The abolition of negative gearing for established dwellings and the reduction in the capital gains tax discount has eased investor demand and tipped the balance in first-home buyers’ favour.

With the property investing landscape facing its biggest shake-up in decades, first-home buyers have been given a rare opportunity as their main competitors for homes step aside.

REA Group senior economist Anne Flaherty said a reduction in investor demand had already begun to impact the wider market.

“We haven't had a change that fundamentally impacted investor demand to this extent in decades,” she said.

“There has been a very notable decline in investor demand, which is going to soften demand overall.”

Although tax changes have reduced investor demand in many hotly-contested markets, some first-home buyers have been holding back until conditions settle. Picture: realestate.com.au/sold

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Suburbs in Perth’s south east such as Armadale, Brookdale and Camillo had huge house price spikes following a surge in investor interest as the city’s housing market took off.

But the local market has completely changed since the federal budget in May, according to real estate agent Ash Swarts of O’Neil Real Estate.

“These are the suburbs that yo-yo the hardest,” he said.

“As of a month ago, investors are gone. But first-home buyers are still buying. They’ve realised that investors aren’t competing as hard. They’re walking through open homes and there might be one or two other buyers there, not 10 or 15.”

Mr Swarts said the withdrawal of investors and concerns among first-home buyers about buying in a falling market had caused prices to pull back.

“We’re seeing offers coming in 10-15% lower than what they were 2-3 months ago,” he said.

“They’re scared that the house will be worth less by the time they get the keys.”

Suburbs where unit prices doubled in three years

Meanwhile, suburbs in Brisbane's south such as Slacks Creek, Beenleigh and Woodridge had massive jumps in unit prices in the past few years amid an investor boom.

Three years ago typical units in these suburbs sold for less than $300,000, but median unit values now range from about $550,000 to $600,000.

Investor demand has eased in affordable suburbs such as Woodridge, leaving the door open for first-home buyers to take advantage of ample choice and lower prices. Picture: realestate.com.au/sold

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Real estate agent and auctioneer Ramin Bay of Ray White Logan City said he estimated that about two thirds of investors had withdrawn from the market recently.

“The supply is much higher and the demand is much lower,” he said. “I would say prices have dialled back about $50,000 for houses and townhouses.”

Nonetheless, some first-home buyers remained nervous about buying while prices were declining, and many were choosing to remain in the rental market, which had put pressure on rental prices, Mr Bay said.

“The first-home buyers were eagerly waiting for the market to cool down to buy, but they don’t want to make a decision now,” he said.

The latest Reserve Bank decision to keep interest rates on hold had improved buyer confidence, Mr Bay said.

“The confidence is going to grow over time unless the government or the RBA shake it again,” he said.

Values in the Geraldton suburb of Rangeway more than doubled in three years. Picture: realestate.com.au/sold

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Other suburbs with huge price spikes in the past few years include Rangeway and Spalding in Geraldton, where cheap prices, tight rental conditions and the potential to renovate older housing stock attracted a wave of investors and house flippers.

In Harristown, a suburb of Toowoomba, the median unit price of $600,000 is about 122% higher than it was three years ago.

Not every suburb where prices doubled in three years was ultra-affordable.

Median apartment prices in Henley Beach, a suburb in Adelaide's west, have surged towards the $1 million mark, rising from less than $500,000 three years ago.

Unit prices doubled in three years in Henley Beach in Adelaide's west. Picture: Getty

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Despite investor demand easing, Ms Flaherty said more affordable areas were likely to outperform less affordable areas in the months ahead.

“Affordable areas are certainly going to see more price resilience,” she said.

Meanwhile, investors who do remain in the market were likely to shift their focus, Ms Flaherty said.

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“I don't think investors are going to fall away completely,” she said. “A lot of people are waiting to see how the market settles and are rethinking their strategies.”

“Growth areas where we see new house and land packages, for example – these tax changes are going to drive up demand in those areas.”