First home buyers defy surge of new million-dollar suburbs

The average home price might have surpassed $1 million but undeterred first home buyers are still taking the leap into the property market in increasing numbers.

Shedding light on just how active this segment of the property market is, loan applications surged 16 per cent at one of Australia’s big four banks.

NAB Executive for Home Lending, Denton Pugh, said that momentum could carry through winter, which is usually a quieter time with less sellers listing over the cooler months.

“Despite recent rate cuts, borrowing costs remain relatively high, limiting property value increases.

“Slower price increases benefit first home buyers by reducing the pressure of rapidly rising house prices.

“Lower rates are helping first home buyers, as are initiatives such as the government’s Home Guarantee Scheme, but housing affordability and supply aren’t problems we can solve quickly.

“There’s no silver bullet when it comes to housing – it will take business, government and communities all working together.”

That affordability strain was highlighted by the latest Australian Bureau of Statistics (ABS) data released on the weekend that showed the average dwelling in the country has reached $1,002,500 in the March quarter.

Western Australia, South Australia and Queensland were the main drivers of the rise, with Queensland reaching the second highest mean price in Australia, behind New South Wales. 

Despite that eye-watering figure and the lingering heat in the Queensland and WA property markets, both of those states were luring in the first home buyers, as was the relatively subdued property market of Victoria.

Victoria is leading the way in first-home owner activity, according to NAB, recording a 28 per cent jump in lending since February. It’s followed closely by WA, up 22 per cent, and Queensland, up 21 per cent.

Geelong children’s librarian Charlotte Dru Ziegeler is one of a growing number of first-home buyers re-entering the market as conditions improve.

The 33-year-old became the first of her siblings to buy a property when she recently purchased a house in the seaside Bellarine Peninsula town of St Leonards, near where she grew up.

She said had been watching the market and wasn’t sure if her deposit would be enough to purchase a home but was encouraged as variable home loan rates started to fall.

“I spoke to a banker, got pre-approved in less than an hour and then, not long after, the right house came up,” Ms Dru Ziegeler said.

“It all happened so fast, it was really exciting, and a huge ‘pinch me’ moment.”

Ms Ziegeler is among the lucky ones of her generation.

Only one in six young Australians have enough cash saved to buy a property under the federal government’s 5 per cent deposit scheme, according to research from Westpac.

That still represents more than this time last year, with the Westpac analysis of savings among mortgage holders showing they hold an average of $67,000 in savings and offset accounts. About three-quarters of those analysed have less than $50,000 for a rainy day and more than half of those are below $10,000.

Among 25 to 34-year-olds who do not have a mortgage, 15 per cent have saved at least $41,000, which would put down a 5 per cent deposit on a median-valued home of $825,000 through the First Home Guarantee.

New home sales on the rise

Sales of new homes, often the choice of buyers looking for affordable options in outer suburban areas, are also on the rise.

The volume of new home sales increased by 6.9 per cent in the month of May 2025, to reach the highest level in 13 months, according to the HIA New Home Sales report, a monthly survey of the largest volume home builders in the five largest states.

HIA Senior Economist, Maurice Tapang, said the rise in sales follows the second cut to the cash rate in over four years.

“The monthly increase in new home sales is consistent with demand factors remaining robust, as Australia records low levels of unemployment, strong population growth and rising prices for established homes.

“Across the states, the results have been mixed. This month, New South Wales and Victoria were the only states surveyed to report increased sales volumes, albeit from very depressed levels.

“Sales volumes in New South Wales and Victoria have been exceptionally weak over the past two years. This increase is the first suggestion of an improvement in market conditions in these states,” Mr Tapang said.

Affordability stretched as million-dollar suburbs bloom

Australia now has 923 suburbs with a geometric mean house price of at least $1 million, and a further 78 expected to join this exclusive club within the next 12 months.

A report released Tuesday (17 June) by Ray White Group found that by 2026, Australia is expected to have more than 1,000 suburbs where houses cost at least seven figures. There are 15,382 suburbs and localities officially recognised in Australia.

Atom Go Tian, Senior Data Analyst, Ray White Group, said Perth was rewriting Australia’s housing map.

While Sydney still dominates with 322 million-dollar suburbs, Perth is driving the next wave, contributing 22 of just 78 suburbs expected to cross the million-dollar threshold in 2026.

“Perth emerges as the star of Australia’s housing boom, contributing an outsized 22 of the 78 new million-dollar suburbs, with this remarkable showing reflecting the city's position as having the strongest house price growth over the past three years, with suburbs showing annual growth rates between 11-14 per cent,” Mr Tian said.

“The Perth story is one of outward expansion; all of the city's inner suburbs now sit above $1 million, pushing growth into previously more affordable areas.

“Roleystone is the most likely candidate to cross the threshold, with current prices at $992,000 and 13 per cent annual growth pointing towards $1.12 million within 12 months.”

Other Perth suburbs are tracking towards even higher levels: Bayswater-Embleton-Bedford ($967,000), Padbury ($969,000), Serpentine-Jarrahdale ($972,000), and Tuart Hill-Joondanna ($958,000) are all positioned to exceed $1.08 million, which is notably higher than comparable suburbs in other capitals.

In Queensland, 17 new suburbs expected to cross the million-dollar threshold.

Like Perth, Brisbane’s growth is spreading to the outskirts of the city: Eagle Farm-Pinkenba leads at $978,000 with 9.9 per cent growth, while the expansion spans from Algester in the south ($991,000) to Karana Downs in Ipswich ($983,000), Mango Hill in Moreton Bay South ($978,000), and Riverhills in the west ($976,000).

Melbourne, despite currently holding second place, has seen muted growth over the past three years, meaning no new suburbs will join the exclusive ranks.

Sydney’s 14 new suburbs tell the story of Australia's most expensive housing market running out of affordable options. With the city's geometric mean house price already at $1.6 million, the new million-dollar suburbs represent the final pockets of relative affordability—mostly clustered in outer growth areas like Currans Hill in Camden ($995,000) and Hassall Grove-Plumpton in Blacktown ($989,000), alongside several Campbelltown suburbs. Even these "affordable" areas are tracking towards $1.02-1.04 million.

In Adelaide, where first home buyers are in the ascendency, 11 new additions show a similar pattern of expansion from the already-expensive Central and Hills region. Bellevue Heights ($997,000), Willunga ($998,000), and Coromandel Valley ($981,000) in Adelaide South are joined by Plympton ($995,000) and Flinders Park ($991,000) in Adelaide West, all showing steady 7-8 per cent growth rates.