Why Affordable Property Segments Are Outperforming

Affordability doesn’t kill growth. It redirects it.

Over the past year, the lower-priced end of the market has outperformed the top end.

That’s not luck. It’s how markets behave when borrowing power tightens.

And we’re seeing it play out in real time.

Borrowing Capacity Is Changing Buyer Behaviour

Rates are higher than they were a few years ago. Serviceability buffers are tighter. Buyers simply can’t stretch the way they used to.

So what happens?

They don’t leave the market.
They adjust.

Instead of buying in the premium pocket, they buy the smaller house.
Instead of the inner ring, they move slightly out.
Instead of the top quartile, they buy below the median.

Demand doesn’t disappear - it shifts down.

Why the Lower Price Bands Are Holding Up

The affordable segment attracts more than one type of buyer.

• You’ve got first home buyers.
• You’ve got rentvestors.
• You’ve got investors chasing stronger yields.
• You’ve got migration-driven demand.

When multiple buyer groups are competing in the same price band, that’s where pressure builds.

Meanwhile, prestige markets already had their run during ultra-low rates. They’re now more sensitive to affordability ceilings.

Here’s Where Investors Get Confused

When people hear “affordable segments are outperforming”, they think:

“Great. Let’s buy cheap.”

That’s not the strategy.

What This Actually Means for Investors

This is not a “buy cheap” strategy.

It’s a buy below intrinsic value in strong suburbs strategy.

There’s a difference.

You don’t want:

• Poor demographics
• High investor concentration
• Fringe estates with endless land supply

You do want:

• Owner-occupier dominant areas
• Infrastructure and lifestyle drivers
• Properties below the suburb median but in quality pockets

Affordable within quality markets is the sweet spot.

Not the cheapest suburb in the state.
The right property inside the right suburb.

The Takeaway

Markets don’t move evenly.

When affordability tightens, growth compresses into the entry-level and mid-tier stock inside strong markets.

Investors who understand that shift - and position accordingly - tend to stay ahead of the cycle rather than reacting to it.

And in this phase of the market, that matters.

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