As we move towards the start of the 2011 auction season, it’s a good time to reflect on your local market and the suburbs that have been running hot over the past 12 months. Let me tell you, there was some incredible price growth in certain pockets of every capital city last year – almost 50 per cent in some cases and that’s off decent volumes of sales too, according to RP Data stats.

When a suburb has had a significant ramp-up in price over a 12-month period, buyers do need to tread carefully. If prices are up by 40 or 50 per cent, you’re really buying at the top of the market in that area. That doesn’t mean it’s a mistake to purchase. You can’t go too far wrong buying good quality properties in blue ribbon suburbs if you’re in it for the long term.

However, if you’ve had your eye on any of these suburbs listed below, you might want to know that they are among the country’s best performing areas for 2010 and the price gains have been big. While I’m not suggesting you give up on these areas, I do think it’s worth taking a look at the surrounding suburbs to see if they offer the same lifestyle benefits but better value for money.

This is called the ‘spill-over effect’. When one suburb’s prices skyrocket, the surrounding suburbs generally benefit as buyers start looking down the road for a better deal. Be careful though – don’t buy in an inferior neighbouring suburb that doesn’t have the things you want, such as cafes, shops, easy transport to the CBD, schools, parks and so forth.

I’ll use Sydney as an example. In 2010, the best performing suburb for house price growth was Wollstonecraft on the Lower North Shore. The median price is now $2 million, up 48.1 per cent during the 12 months of 2010. Right next door is Waverton. Both suburbs are on the harbour with beautiful local parks, tree-lined streets, cafés, shops and their own train stations.

Waverton houses finished the year at a median price of $1.68 million, up 32 per cent. So right now, there’s better value available here. And Waverton is most definitely not inferior to Wollstonecraft. Both are highly-regarded areas on the Lower North Shore and have the same character and lifestyle features. So I suggest Wollstonecraft buyers also consider Waverton when they’re out shopping this season.

Here’s RP Data’s run down of Australia’s best performing areas for 2010.

Best performing suburbs 2010

National
  • Houses – Research, Melbourne VIC ($748,500, up 49.7 per cent); Lorn, Hunter Valley NSW ($485,000, 49.2 per cent), Wollstonecraft, Sydney NSW ($2 million, 48.1 per cent)
  • Apartments – Nambucca Heads, North Coast NSW ($293,000, 47.2 per cent); Fairy Meadow, Illawarra NSW ($347,500, 46.6 per cent); Caulfield South, Melbourne VIC ($639,500, 44.2 per cent)

Sydney

  • Houses – Wollstonecraft ($2 million, 48.1 per cent); Kensington ($1.73 million, 44.2 per cent); Bondi Junction ($1.29 million, 44.1 per cent)
  • Apartments – Ultimo ($367,250, 44 per cent); Woolooware ($562,250, 37.1 per cent); Rose Bay ($750,000, 36.4 per cent)
Melbourne
  • Houses – Research ($748,500, 49.7 per cent); Gardenvale ($1,252,500, 49.6 per cent); Chum Creek ($403,000, 48.4 per cent)
  • Apartments – Caulfield South ($639,500, 44.2 per cent); Safety Beach ($450,000, 44 per cent); Kingsbury ($425,000, 40.7 per cent)
Perth
  • Houses – Lathlain ($752,500, 43.3 per cent); South Perth ($1.350 million, 40.8 per cent); Boya ($584,000, 35.6 per cent)
  • Apartments – Shelley ($615,000, 41.5 per cent); Inglewood ($504,000, 35.1 per cent); West Perth ($327,500, 31 per cent)
Canberra
  • Houses – Farrer ($726,500, 30.9 per cent); McKellar ($647,500, 29.5 per cent); Macquarie ($575,000, 28.6 per cent)
  • Apartments – Curtin ($396,500, 27.9 per cent); Conder ($415,000, 20.3 per cent); Yarralumla ($855,000, 20 per cent)
Adelaide
  • Houses – Marden ($717,500, 43.5 per cent); Millswood ($879,500, 38.4 per cent); Black Forest ($632,500, 36.9 per cent)
  • Apartments – West Beach ($380,000, 37.2 per cent); South Plympton ($360,000, 34.8 per cent); Mile End ($475,000, 31.6 per cent)
Darwin
  • Houses – Ludmilla ($630,000, 34 per cent); Alawa ($555,000, 29.1 per cent); Woolner ($740,000, 26.5 per cent)
  • Apartments – Gray ($355,000, 37.5 per cent); Millner ($400,000, 29.9 per cent); Driver ($383,500, 29.1 per cent)

Hobart

  • Houses – Hobart ($490,500, 36.3 per cent); Glebe ($511,00, 29.5 per cent); Bellerive ($450,000, 28.6 per cent)
  • Apartments – Bellerive ($308,500, 22.2 per cent); Battery Point ($495,000, 19.3 per cent); Lindisfarne ($358,000, 18.9 per cent)

N.B. We’ve purposely omitted Brisbane due to the impact of the flood crisis.