Outer suburbs stalling as war, rates and fuel shocks hit buyer confidence

The outer suburbs of the nation’s capitals have been the standout performers over the past year, as the last vestiges of the property upswing ripple outwards.

Yet the US and Israel’s war on Iran, soaring petrol prices, and interest rate rises may have put an abrupt end to the party, snuffing out the last embers of the nation’s real estate boom.

“We’re experiencing low inquiries, no one turning up at auctions,” says Basel Nahas, principal of Laing + Simmons Rooty Hill/Mount Druitt, in Sydney’s west.

“The market has slowed down in the last couple of weeks since the war, and interest rate and petrol price rises, but before that it was guns blazing.”

It’s a similar story in Brisbane.

Leisa Le, sales agent at Ray White Forrest Lake, in Brisbane’s outer-west, says the market had been booming, but things had slowed dramatically “in the last three weeks”.

“Usually, if I have five open houses, I will sell four in a day,” Ms Le told Australian Property Investor Magazine.

“But since the war has started, besides the Saturday just gone, I’ve had zero everything. 

“Zero buyers, time wasters and buyers who make an offer after negotiating for five hours, only to then say they have put in five other offers. 

“It’s very frustrating,” she said.

Data from analyst Cotality shows that over the last 12 months it’s been the outer suburbs of the nation’s capitals that have been outperforming, and helping underpin city-wide price medians.

In greater Sydney the top ten best performing areas include Mount Druitt, Blacktown, Parramatta and Penrith in the city’s west.

In Melbourne, Frankston, in the city’s outer-south, was the best performer, with values growing 12.9 per cent over the year, to a median dwelling value of $844,347.

In greater Brisbane, Logan, between Brisbane and the Gold Coast, was the top performer, delivering a whopping 23.9 per cent growth over the year, to a median of $940,391.

In Forrest Lake and inner-Ipswich, prices grew 21 per cent and 20.8 per cent respectively over the year.

Property upswings typically begin in the inner cities of the nation’s capitals, working their way through middle-ring suburbs, with prices surging in outer-suburbs at the end of the cycle.

This time around, it appears the end of property cycle may end up being marked by the invasion of Iran, and the flow on effects — especially on buyer sentiment.

“We have definitely seen a market shift since the war started, and obviously rising fuel prices have been a shock,” says Mr Nahas, in Sydney’s west.

Before that the “whole market” was booming.

“Investors were very confident in buying, there was fear of missing out, they wanted to get in the market,” Mr Nahas said.

He said on 20 December, the last Saturday before the Christmas break, a Mount Druitt property, a house on a 1000sqm block, had delivered a record for the suburb, selling for $1.716 million.

“It blew everything out of the water, it went way above expectations,” Mr Nahas says.

But just three months later and it’s an entirely different market.

Regarding the outlook, Mr Nahas is unsure, but it feels like it’s the end of the cycle.

“Particularly as the market hasn’t gone backwards in nine years, everyone has been making money, year after year,” he says.

“Maybe this is it. It kind of feels like it”.

Perth’s outer suburban boom

In greater Perth, six of the ten best performing suburbs over the past 12 months are in the city’s south-east.

At the top of the list is Serpentine, delivering 28.9 per cent growth for the year, to a median dwelling value of $921,309, according to Cotality.

The suburbs of Armadale and Gosnells, on the city’s south-eastern fringe, delivered growth of 28.6 per cent and 25.2 per cent respectively.

The median dwelling value in Armadale is now $871,154, and in Gosnells it is $881,301.

Diljot Randhawa, principal and Director at Ray White Armadale City, said the already strong market had been supercharged by recent changes to first home owner concessions.

Since 1 October, under the Federal Government’s expanded Home Guarantee Scheme, first-home buyers can purchase with a 5 per cent deposit without having to pay lenders’ mortgage insurance.

“That really fired up the market, so the last six months have been crazy” Mr Randhawa told Australian Property Investor Magazine.

“With the first home buyers grant, everything is up 10-15 per cent where we are.”

“Since October, anything which was going for $750,000 was then going for up to $820,000 and $850,000,” he said.

Mr Randhawa said the market had recently notably slowed, although it was a difficult market to interpret.

“Last week was very slow but we also had 59 families come to inspect, and we had six offers on, a $2.3 million home in Treeby, where the average price is $1.1 million to $1.2 million,” he said.

In Sydney’s west, Mr Nahas says he’ll wait and see where the market goes from here.

“I’ll just put my hands in my pockets and wait and see,” he says.

“People who come and look are in no hurry to buy, and I don’t blame them.”