Australia's property prices are back on a runaway train. October delivered the fastest home value rise since mid-2023. But according to Cotality, it's the cheaper end of the market that continues to see the strongest gain.

By the numbers

Australia’s cheapest homes are still rising faster than the rest of the market, and the gap widened again in October.

Cotality’s Home Value Index shows dwellings sitting under the new 5 percent deposit price caps rose 1.2 percent for the month. Properties above the caps rose 1 percent. Just so we're all on the same page: the "cap" here is the maximum property price under the five per cent deposit scheme in that particular region. Those caps vary depending on where you're looking to buy. See the below from Cotality to help make sense of it.

Source: Cotality, Housing Australia

Moving on!

In October, houses showed the clearest distinction between cheaper, sub-cap properties surging in price compared to those above the cap. Sub-cap houses lifted 1.3 percent. Houses above the cap lagged by 32 basis points. Units showed a smaller but still clear difference, with sub cap stock up 1 percent and a 19 basis point premium over higher priced units.

One would think that the more prestigious the property, the more you'd see values increase, right? Not so fast, because in this instance, the price premium on so-called 'cheaper property' is being driven entirely by more competition. Investors are going up against families pushed down the ladder by unaffordable housing and young couples looking for their first home.

Cotality observes that these conditions have been in place for almost two years, which is why cheaper homes have been outpacing the broader market for so long. And now that the Home Deposit Guarantee Scheme is nationwide, it's only going to add more contenders come auction day.

Of course, this means that owners on the lower rungs are the winners. The capital gains are landing fastest in markets once seen as entry level.

You can dive deeper into the report (even go suburb by suburb!) on Cotality's website.