Australian property prices are still marching upwards despite high interest rates, but experts say there are still some markets offering better hopes for buyers.

National dwelling values shot up 0.5 per cent in August, according to the latest CoreLogic data, which was the 19th consecutive month of growth.

Mid-sized capitals continue to lead the upswing, with prices across Perth up 2 per cent, Adelaide up 1.4 per cent and Brisbane increasing 1.1 per cent.

That was contrasted with a 0.3 per cent rise in Sydney and a 0.2 per cent fall in Melbourne.

InvestorKit CEO Arjun Paliwal said the market is still broadly favouring sellers, with more owners listing their properties to cash in on higher prices.

But there are still some areas that are more favourable to buyers than the hottest suburbs, he said.

“Melbourne and Hobart are best for buyers’ market opportunities,” Paliwal explained.

“But if you’re looking at sellers markets, it’s clear that the markets of Perth and Adelaide are the strongest.”

Affordability hurdles

There is growing focus on markets that are more affordable for home buyers as affordability hurdles start to emerge in mid-sized capitals, causing the pace of price growth to ease off.

CoreLogic’s head of research Eliza Owen said that property prices rose 1.7 per cent nationally over the three months to August, but that was down from 3.3 per cent over winter last year.

“Housing values cannot keep rising at the same pace in the mid-sized capitals of Perth, Adelaide and Brisbane,” Owen said.

“Affordability is becoming increasingly stretched, particularly in the context of elevated interest rates, loosening labour market conditions and cost-of-living pressures.”

Affordability challenges have resulted in “cheaper” suburbs in major capitals start to outperform the more expensive areas, with the lowest quartile of the market rising 2.7 per cent over the three months to August.

That compares to just 0.3 per cent across the upper most quartile of properties.

Growth has emerged in more affordable suburbs like Canterbury in Sydney (up 13.3 per cent in 12 months), Kwinana in Perth (up 31.4 per cent) and Brisbane’s Springwood (up 25.5 per cent).

“More of the buyer pool may be skewed to the lower-priced segment of the market, supporting values at the more affordable end of the pricing spectrum,” CoreLogic said in its latest report.

Wary buyers chase value

Diaswati Mardiasmo, chief economist at PRD, said some markets are more favourable to buyers than others because those looking for properties are wary of getting value for money.

Interest rates are high, which has squeezed borrowing power, meaning buyers need to make their savings stretch as far as possible.

Mardiasmo also said there’s usually more housing available in relatively more affordable suburbs.

“We have sticky buyers. That is, cautious buyers who are aware they are purchasing property at inflated prices,” he said.

“Leaning towards more affordable suburbs, or as affordable as they can possibly be … is a key motivation.”

Paliwal said a key reason that some parts of the country are exhibiting more moderate growth in property prices – or even slight falls as with Melbourne over August – is economic performance.

Mid-sized capitals like Adelaide, Perth and Brisbane are growing strongly right now, which is underpinning stronger demand and faster increases in house prices from a lower starting point.

Buyers also face higher affordability barriers in Melbourne and Sydney with lower levels of overall supply, which has tempered property price growth in these areas.

“There is a divergence of trends occurring,” Paliwal said.

“We’re seeing our biggest capital cities – Sydney and Melbourne – go through a bit of a slowdown period.

“And then you’ve got some of our smaller capitals that have been underperforming too, such as Hobart and Canberra.”