Room to move: Australia’s most undervalued suburbs

In this housing market, who wouldn’t want to make their buying dollars go further? A new report has revealed the suburbs where you may just grab a bargain — and which areas to avoid.

Australia’s most under and overvalued suburbs have been highlighted in a recent report.

The report by DSR data reveals the major city suburbs with the most room for capital growth as well as those potential buyers may want to avoid if they’re looking for maximum value for money.

DSR Data analyst Jeremy Sheppard told News Corp undervalued suburbs were typically areas with a long history of sub-par growth coupled with a recent improvement in demand.

“It’s underperformance followed by green shoots,” he said, noting that some undervalued areas had large price falls last year and were now more accessible for budget-conscious buyers.

“They’re suburbs where prices hit a peak and came down drastically in the last 12 months and you’d have buyers thinking maybe the properties are good value now.”

Suburbs were considered “overvalued” if prices had risen dramatically over a short period and were now well above the cost of similar homes in nearby areas and where the supply of properties available for sale within the local market was beginning to outweigh demand, suggesting impending price falls.

Mr Sheppard said “overvalued” markets were often areas where buyers could no longer justify paying the inflated prices on offer because they could get better value in nearby areas.

In determining whether a suburb was undervalued or overvalued, the report considered a suburb’s demand to supply ratio, market cycle timing, ripple effect potential, the unit to house ratio, and the value of surrounding suburbs, among other factors.

We take a look at the state of the market in SA, Victoria, QLD and NSW.

ADELAIDE

Unley was one of Adelaide’s most undervalued suburbs, according to the report.

According to the DSR report, units in the inner-city suburb of Norwood have the most room to grow. As the Advertiser reported, the suburb has a median unit price of $422,100, making it an attractive proposition for both first homebuyers and investors.

Glenunga houses – which carry a median price of more than $1.073m – were ranked second, while Plympton units, Westbourne Park houses and Rosewater houses rounded out the list of the best suburbs to buy in right now.

When it comes to properties the report suggested buyers avoid, Craigburn Farm houses – with a median of more than $1.138m – were deemed the state’s most overvalued.Houses in St Mary’s, Oakden, Clarence Gardens and Blair Athol rounded out top five most overvalued properties in metropolitan Adelaide.

Read the Advertiser’s full report and explore the list of Adelaide’s top 20 most undervalued and overvalued suburbs.

MELBOURNE

St Kilda was identified as one of Melbourne’s most undervalued suburbs.

In Melbourne, the report identified houses in Carlton North as having the most potential for “rapid growth” in the years ahead.

Other suburbs where homes were deemed to be undervalued included Beaumaris, Avondale Heights and St Kilda, which, according to PropTrack saw the biggest fall in prices (114%).

St Kilda-based buyer’s advocate Emily Wallace told the Herald Sun the suburb was often overlooked by buyers and not fully appreciated for the amenities it offered including the beach, public transport and local eateries.

“Unfortunately one ‘rough’ pocket results in the whole suburb being painted with the same brush,” Ms Wallace said.

Read the Herald Sun’s full report and explore the list of Melbourne’s top 20 most undervalued and overvalued suburbs. 

SYDNEY

This house in undervalued Forest Lodge recently sold $2.1m.

As the Daily Telegraph reported, the report found that Sydney’s most undervalued suburbs were spread across the city but tended to be concentrated in pockets on the northern beaches, eastern suburbs, inner west and the St George area.

Houses in the inner west suburb of Forest Lodge were the most undervalued, with prices well below neighbouring areas such as Annandale and Glebe.

Local agent Matthew Carvalhlo of Ray White said some Forest Lodge houses were slightly smaller than in neighbouring areas but the suburb was otherwise “very similar”.

Other suburbs on the undervalued list included Greenacre, Brighton-Le-Sands, Bexley North and Denistone.

Pello agent Michael Dowling said Denistone was a hidden gem.

“It’s one of the least searched suburbs online, but there’s incredible value,” he said.

“We often get buyers who have missed out at auctions in other areas for $3m, $3.3m, and they get a Denistone house for $2.5m or $2.8m. You are only five minutes away, it’s the same access to services.”

Read the Daily Telegraph’s full report and explore the list of Sydney’s top 20 most undervalued and overvalued suburbs.

BRISBANE

Brisbane’s undervalued suburbs: This Graceville home sold for $865,000 in 2022.

With the city experiencing record price growth since the pandemic, some of the suburbs on DSR’s list of Brisbane’s most-undervalued suburbs might come as somewhat of a surprise.

Led by Graceville, the list also included Underwood, Auchenflower, Cannon Hill, Nudgee, Richlands and Lota where house prices could be set to see their own boom in the years ahead.

Unit prices in 13 areas have also been identified as being ripe for growth, including the inner-city suburbs of South Brisbane, Spring Hill, Brisbane City, Bowen Hills and West End and suburbs south of the river including Carina Heights, Bulimba, Mt Gravatt East.
Buyers’ agent Bharat Patel of Cashflow Properties said undervalued suburbs primed for growth were an investor’s ideal target, with Brisbane still showing good value despite the pandemic price surge.

“I still remember some suburbs, for example, Logan Central, where houses used to sell around $180,000 to $220,000 only.
“Now you literally find nothing in that price range and most of the houses are about half a million dollars.
“We don’t need to wait until the Olympics come in,” he said. “Before then most of the suburbs in Brisbane will be $1m.”

Read the Courier Mail’s full report and explore the list of Brisbane’s top 20 most undervalued and overvalued suburbs.

Originally published as Room to move: Australia’s most undervalued suburbs