2023's most promising growth suburbs

With so many ups and downs hitting the Australian property market over the past few years, it can be hard to make sense of where things are at and what's up ahead. 

That's why it's important for sellers and buyers alike to focus locally and get a strong understanding of exactly what's going on in a particular suburb. The more you zoom in, the more relevant knowledge you can gain. 

We spoke to Kent Lardner, founder of Suburbtrends.com, about how to grasp the health of your local area and which Australian suburbs are showing promising signs for 2023.

It all comes down to supply and demand

It's a bit of a cliché in real estate, but supply and demand in your suburb is as crucial an indicator as ever when trying to time a sale. 

Mr Lardner explained that a shortage of listings has been one of the key things helping to lessen the severity of the current downturn. 

"Even though prices are coming down, many markets have very low inventory levels," he said. 

"Usually, when we call that out and say inventory levels are low or trending down, that indicates in two or three months time that prices are going to go up. What I'd probably argue more today is it means prices aren't falling at the same rate any more."

He pointed out that, between homeowners who are either mortgage free or have a manageable amount left to pay, there are a significant number of people who simply don't need to sell — and, as a result, they won't. 

That means fewer listings that require fewer buyers to satisfy demand and hold prices relatively steady. 

However, some areas see a high concentration of homeowners with large mortgages who are being hit hardest by interest rate hikes. In these areas — "mortgage belt suburbs" — prices are more likely to suffer as listings creep up and properties take longer to sell. 

Understanding where a particular suburb falls in this mix can go a long way to painting a picture of how prices will react as interest rates continue to climb.

Past performance can be misleading

When asked about top performers over the past 12 months, Mr Lardner pointed out that highlighting some of the more resilient-seeming locations could be a red herring. 

"Most markets have peaked. Some have peaked a year ago, some a little longer, and a lot have peaked in recent months. There are very few that you can now say are yet to peak," he explained. 

The problem, then, is that claiming the best-performing suburbs are simply the ones that peaked most recently could be misleading, since they may be about to experience their own run of declines. 

Instead, perhaps the most promising markets are the ones that have already fallen and are showing signs of settling. Once they've hit the bottom, the only way is up. 

With that said, Mr Lardner noted that suburbs that demonstrate superior affordability have generally been the strongest performers — particularly suburbs with a median price of under $750,000.

As reduced borrowing capacity has gradually pushed buyers down one or two price brackets, more affordable suburbs have experienced refreshed demand while more expensive locations have suffered larger price declines. 

This explains why units have generally outperformed houses during the downturn, as buyers seek better-value housing in order to make their money stretch further.

Top suburb picks for 2023

With the idea of relative affordability in mind, Mr Lardner put together a selection of suburbs and regions around Australia that he believes show promise for 2023. 

Two of his top picks in Sydney are Erskine Park and Picnic Point. 

Erskine Park, NSW

Erskine Park in St Marys, which roughly sits around the city's wider median price point, "bubbled up to the top of the list" based on Mr Lardner's scorecard, particularly because of a "significant decline in available stock."

He noted that "listings have been gradually declining in the area from about 109 houses in August 2022 down to just 54," a shortage level that buyer demand looks to be meeting. 

Picnic Point, NSW

Picnic Point, "a more elite location" just north of the Sutherland Shire, has a median price of around $1.4 million and looks to be drawing significant buyer interest. 

"It looks like demand is certainly keeping up with supply and then some," he explained, pointing out there are currently just seven homes listed on the market. 

As for Melbourne, two of Mr Lardner's promising spots include Greensborough and Oak Park. 

Greensborough, Victoria

Greensborough in the north-east has seen prices fall more than $100,000 from their peak, something he said has a "psychological impact" that has made the suburb particularly attractive. 

"What has also happened is listings have really plummeted. In November I counted 263 for that broader area. That's down to 150 listings right now. That has a really nice stabilising effect," he said.

Oak Park, Victoria

Oak Park sits adjacent to Essendon Fields, an area Mr Lardner sees strength in. The suburb itself has a median price of $1.13 million, and there's a distinct shortage of stock. 

"Inventory levels are really tight," he said, adding that demand looks steady while listings have plummeted over the past six months. 
 

Looking up to Brisbane, two of his standout suburbs were Carindale and Mout Gravatt.

Carindale, Queensland

Carindale in Brisbane's south-east is one of the city's more expensive locations, sitting at a median price of $1.43 million, however it boasts "big family homes on good sized blocks" that are particularly appealing to interstate buyers. 

"Demand is certainly absorbing what's on the market more than adequately, and I've seen a slight uptick in prices in the area. With the way interest rates are going, I can't honestly say that will continue, but it's a good sign," Mr Lardner said. 

Mount Gravatt, Queensland

The leafy Mount Gravatt in Brisbane's south is another above-median price suburb (currently around $1.1 million) that Mr Lardner flagged as seeing listings decline significantly. 

"Demand has been more than enough to absorb what's been coming on the market, and as a result of that we've now seen a couple of months of ongoing price rises," he said. 

Find the full list of Suburbtrends' 2023 suburbs and regions to watch here.

What's in store for the year ahead? 

There are a number of key themes that Mr Lardner sees playing out over the course of 2023. 

First of all, a surprising return to higher-density areas of Sydney and Melbourne (Zetland and Docklands, for example) could be on the cards as immigration ramps up in the face of an already-crisis-level rental market. 

"They'll go to where the available properties are, and I think that will have a really nice levelling effect. For landlords who have had a really bad run for a long time, there might be some relief in sight for those people," he explained. 

The rental crisis may also see a lift in tenants becoming first home buyers, as there are a number of areas around Australia where there is little difference between asking rents and required mortgage repayments. 

That could drive further demand in the lower end of the housing market, again helping to buoy prices in more relatively affordable locations. 

Broadly speaking, Mr Lardner said the current market is "fantastic" for upsizers who can make a significant net saving on a home upgrade. 

He did, however, caution that downsizers would likely be worse off, particularly those moving from a house to an apartment, as those smaller property types had fallen in price the least. 

Ultimately, the best-performing suburbs in 2023 are most likely to be those that represent the best relative affordability — ie. median property price compared to the local average income. 

"If you've got an affordable suburb where I can buy for 8 or 9 years of income, they seem to be the ones that are going to do the best."