The luxury suburbs where house prices are getting cheaper – or booming

Even upper-end home buyers are not immune from the pressure of high interest rates, as high mortgage costs have kept a lid on property price growth in expensive suburbs over the past year.

Those fortunate enough to buy now, however, may see their purchase appreciate as interest rates start to fall.

Even high-end home buyers borrow money.Credit: Louise Kennerley

Australia’s ‘luxury suburbs’ are areas where the median house price exceeds $4.09 million in Sydney and $2.52 million elsewhere, as defined by Ray White’s Luxury Report for 2025.

The fastest growing luxury neighbourhood in Sydney over the past year was the Coogee-Clovelly area, recording an increase of just 2.35 per cent but to a relatively high median house price of $4.45 million.

There was similarly modest growth in the Castle Cove-Northbridge area, up 2.16 per cent to $4.19 million, and Bondi Beach-North Bondi, up 2.02 per cent to $4.19 million.

In Melbourne, the nine luxury suburbs recorded annual change between a fall of 0.58 per cent and a rise of 0.59 per cent, the report found.

Median house prices inched lower in Toorak, down 0.12 per cent, Brighton, down 0.24 per cent, and Malvern-Glen Iris, down 0.58 per cent.

But it was a different story in the west, where house prices in Perth’s Nedlands-Dalkeith-Crawley region and in City Beach rose more than 8 per cent each.

South-east Queensland also recorded an uptick, including 6.35 per cent growth in Brisbane’s Newstead-Bowen Hills region and 4.73 per cent in the Gold Coast’s Mermaid Beach-Broadbeach.

Ray White chief economist Nerida Conisbee said many buyers at this price point still take advantage of debt to purchase, and high interest rates have flattened out their purchasing power.

She thought Sydney’s extremely high house prices had started to weigh on growth rates, while Melbourne’s weaker economy had affected buyer confidence even at the top end.

By contrast the Gold Coast and Perth markets were growing in price due to population growth.

“If you’re coming from Sydney, landed on the Gold Coast, you’re looking at the top end of the market – it’s looking quite affordable,” she said. “They’re probably selling in Sydney or Melbourne and have a significant amount of capital to invest.

“The level of luxury on the Gold Coast has changed dramatically since COVID and as a result the type of homes are getting far more expensive at the top end.”

She thought that interest rate cuts would support prices in areas where growth has been weaker.

“I do think Sydney and Melbourne will strengthen off the back of interest rate cuts. WA is a little bit more uncertain … the fallout from the trade war on iron ore will probably hit that.”

McGrath Coogee partner and sales agent Chris Volpatti thought Coogee and Clovelly have been attracting buyers due to their value compared to their neighbours.

“Coogee is becoming more and more discovered as the prices of your Bronte and your Tamarama have experienced such exponential growth. Coogee’s the neighbouring suburb and so is Clovelly, and people are turning to those sorts of suburbs which is pushing prices up,” he said.

Buyers are cautious about the economic outlook.Credit: Penny Stephens

“You do tend to get some bigger land sizes in Coogee so you’re definitely getting a more bang for buck factor. And then there’s people who just prefer Coogee.”

He is also fielding interest from expat buyers and rural buyers looking for a bolthole to be near their children who have left the farm and moved to the city.

He said a budget of $3.5 million in Coogee would buy an entry-level semi with scope to update, while $10 million buys a generous-sized freestanding home with views.

In Melbourne, Emma Bloom, a buyers’ agent from Morrell & Koren, says global uncertainty generated by the “Trump dump” and multiple wars is affecting top end buyers’ mindset and confidence.

“Every day in the papers you see heads of global companies fearing the worst, whether that’s to do with bonds, equity or trade,” she said.

“The Trump dump is affecting all industries, and if they’re not affected now, people are worried about it and whether they will be next.”

Victoria’s suite of property taxes is also a turn off, she said, with recent changes relating to vacant land, holiday homes and investment properties hitting high-value properties with much higher tax liabilities.

“Smart money is doing nothing in Victoria at the moment, and at the top end there is no supply and much less demand,” she said.