The next million dollar suburbs in a cooling market

A house in Marangaroo, in Perth's northern suburbs, costs $933,000 today. Even at half its current growth rate, it will cross $1 million within 12 months. And this is happening while much of the country braces for a slowdown.

Marangaroo is not alone. Across Perth and Adelaide, a pipeline of low-investor areas is still climbing toward the million-dollar mark at double-digit annual growth, even as investor-heavy markets cool around them.

The next 12 months will look very different from the last three years. High interest rates, global uncertainty, and federal budget changes targeting investor activity are all pointing toward slower growth ahead.

But just as the boom of the last three years disproportionately benefited regional Australia and smaller capital cities, the slowdown won't land evenly either. The key reason is investors are not evenly distributed.

Where do investors concentrate?

Investor-owned housing is heavily concentrated in inner-city markets. Melbourne Inner has the most investor-owned housing of any SA4 in the country, with over 133,000 households renting from a private landlord. By investor share, Sydney City and Inner South lead at 42 per cent, followed by Brisbane Inner City at 41 per cent. These are unit-dominated markets where investor capital has been the dominant force for years.

The suburbs where investors are thinnest, under 19 per cent, tell a different story. They tend to be more affordable, more owner-occupier driven, and critically, they are still growing.

Suburbs with the highest investor concentration are already recording the weakest annual growth at 6.9 per cent, compared to 9.5 per cent for the lowest investor band. They are also the most expensive, with a median house price of $1.58 million versus $1.01 million.

More telling still is that 31 per cent of suburbs with investor concentration above 28 per cent have already recorded negative annual house price growth, compared to just 14 per cent of suburbs in the lowest investor band.

Australia’s next million dollar suburbs

We identified capital city suburbs priced between $900,000 and $1 million with investor shares below 19 per cent, where current growth is strong enough to cross $1 million within 12 months.

Perth dominates for the same reason it dominated last year's edition of this analysis: the city's inner suburbs have already crossed $1 million, pushing growth outward into previously affordable areas. What is different this year is the investor lens. The suburbs approaching the threshold are not being carried by investor activity. Investor shares range from 12 to 18 per cent.

Adelaide's three entries follow a similar pattern. Sheidow Park-Trott Park and McLaren Vale sit in the southern suburbs, while Golden Grove represents the northern growth belt. All three carry investor shares of 11 to 13 per cent and are growing at 10 to 12 per cent annually.

Meanwhile, Darwin's Howard Springs fits the same profile. The median house price sits at $956,000 and has surged 14.6 per cent over the past year. With just 9 per cent investor exposure, it is the only suburb outside Perth and Adelaide to meet the criteria for crossing $1 million in the next 12 months.

The absence of the three largest capitals from the list is not surprising. In Sydney, the only suburbs in this price range with low investor exposure are on the Central Coast and in the Blue Mountains, growing at just 5 to 7 per cent. In Melbourne, the candidates sit in the outer Yarra Ranges at under 10 per cent growth. Brisbane has no qualifying suburbs at all. These cities have either already priced past the million-dollar mark, or their affordable pockets carry higher investor exposure.