A new modelling exercise says hundreds of Australian suburbs could see median values rise sharply over the next ten years, with some doubling by 2036. It is an eye-catching claim arriving in the middle of a downturn. The useful question is not whether the numbers are plausible on a spreadsheet. It is what would have to be true in the real economy for them to come good.
What the projections actually say
The modelling takes historical performance and a 20-year trend, one that already absorbs the current slump, and projects median house and unit values for individual suburbs out to 2031 and 2036. Most regions show gains. Some outperform others.
A few of the headline results:
- Brisbane is 3.9 per cent below its March peak, yet several Queensland suburbs are tipped to double by 2036, with cheaper areas beating prestige ones.
- In Sydney, 246 suburbs are projected to average above $2m by 2031 and 92 above $3m, with sub-$1m houses fading.
- In Melbourne, 69 suburbs may add six figures by 2031, and 285 could rise at least 50 per cent over ten years. Suburbs with million-dollar houses could go from 188 now to 372 in 2036, leaving just 23 of 395 analysed markets under $1m.
- Some northern Adelaide suburbs could climb by as much as 250 per cent.
The economist quoted alongside the data was clear that these are patterns from the past, not firm forecasts. That caveat matters more than any single number.
Why extrapolating the past is the weak link
A trend line is a description of what happened under a particular set of conditions. Project it forward and you are quietly assuming those conditions return. Over the last two decades, borrowers benefited from falling and then very low interest rates, loose lending standards for long stretches, and strong demand tailwinds. The next ten years may not offer the same help.
Here’s the catch. A 20-year average that includes the current dip still treats the dip as a blip. If this downturn reflects a structural reset in borrowing capacity rather than a pause, the line bends differently.
Serviceability sets the ceiling on price
Prices cannot outrun what buyers can borrow for long. Lending is capped by income, interest rates and the buffers banks apply when they test a loan. If rates stay higher than the post-2010 norm, or buffers stay wide, the same household income supports a smaller loan. That is a direct brake on how fast values can compound.
For a median home to double in ten years, either incomes must roughly double too, or borrowing costs must fall enough to stretch the loan size. Wage growth around 3 to 4 per cent a year does not get you there on its own. It implies prices growing faster than incomes, which means affordability worsens from an already stretched base. That can happen for a while. It rarely runs ten years without hitting a wall.
The sub-$1m disappearance in Sydney and Melbourne is the same story seen another way. It says the entry price is being pushed beyond what a typical household can service, not that more households can suddenly afford it.
Supply is the stronger argument, and it cuts both ways
The bullish case does have a real pillar: constrained supply. Sydney’s market is described as supported by tight supply, and a thin construction pipeline does put a floor under prices when demand holds. Our look at building approvals and what a thin pipeline means for prices covers that mechanism.
The national target shows how far behind supply is. The housing accord shortfall of roughly 130,000 homes is a sign the market is undersupplied, which supports values. But it is also a reason governments may keep pushing planning reform, zoning change and funding to close the gap. If they succeed, supply response blunts the price effect. If they fail, the shortage props prices up but stresses affordability and rentals further. Either way, the supply story is a swing factor, not a guarantee.
What would have to hold for suburbs to double
For the optimistic path to land, several things need to line up at once:
- Interest rates settle low enough that serviceability stops shrinking loan sizes.
- Household incomes grow faster than recent trend, or dual-income borrowing expands further.
- Construction stays constrained, so supply does not catch up with demand.
- Tax and policy settings stay supportive of investors and owner-occupiers rather than shifting against them.
- Credit availability stays open, with no major tightening of lending standards.
Miss one, and the range of outcomes widens. Miss several, and the 2036 figures look like the high end of a scenario, not a base case. For context on how price cycles behave through a downturn, our guide to house prices, downturns and auction results explains what the data typically looks like on the way down.
Key numbers
- 3.9 per cent: Brisbane’s fall from its March peak
- 246 and 92: Sydney suburbs projected above $2m and $3m by 2031
- 285: Melbourne suburbs that could rise at least 50 per cent in ten years
- 23 of 395: markets projected to stay under $1m in 2036
Why the cheap suburbs get the biggest percentage numbers
A suburb that starts at a lower price needs a smaller dollar gain to post a large percentage move. That is partly why cheaper areas are tipped to beat prestige ones, and why the largest figures sit in places like northern Adelaide. It is arithmetic as much as outlook. A 250 per cent gain from a low base can look dramatic yet still leave a median value that was modest to begin with.
It also means the percentage headline is the wrong thing to chase. What matters for a buyer or investor is the dollar entry cost, the rent that property can realistically earn, and whether the loan stays serviceable if rates move.
The practical read for buyers and investors
Treat a decade-long suburb projection as one input, not a plan. Pressure-test any purchase against a flat or falling market over the first three to five years, since that is the window when most borrowers get squeezed. Check that the cashflow works at a higher rate than today. Ask what the model assumed about rates, and whether you would be comfortable if it was wrong.
The long-run direction for Australian values has been up, and tight supply is a genuine support. But probabilities are not promises, and a clean line on a chart hides the bumps that decide who stays in the market.
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General info, not financial advice.
