The Burrow
Mar 20, 2026
The term ‘gentrification’ was coined in London in the 1960s, when high-income residents began moving in to, and investing in, low-income, urban neighbourhoods. By the late 60s and early 70s, there was evidence of this trend emerging in Australia and North America.
Gentrification has long been a common phenomenon, but it seems to be on the rise again. As such, it’s important to understand how gentrification can impact prospective home buyers, as well as the opportunities and challenges that gentrification offers.
As residents are priced out of areas that have been previously affordable, this has forced them to consider buying in suburbs they would have previously rejected. This kind of investment has typically seen rising demand-driven growth, the establishment of new businesses, and resulting infrastructure development. However, gentrification can also bring affordability pressures too. As cities and suburbs evolve, rents are often hiked, bills increase and the general cost of living can soar.
As home loan comparison experts, Compare the Market AU analysed cities across the US and Australia to identify the up and coming areas showing gentrification signals, and what it means for potential homebuyers.
We analysed population growth, housing searches, cost of living and rent-to-income ratios to understand which US cities are showing potential gentrification signals.
The US cities with the highest scores were:
Miami scored considerably higher than other American cities, due to an increase in housing demand search, the largest population growth on our index and the second highest rent-to-income ratio. Not only is Miami a sought-after location for homebuyers, but strong demand and population growth is creating more expensive and potentially less sustainable lifestyles for those residing there.
New York City’s score of 56.02 reflects its high cost of living and rent to income ratio, despite recording one of the lowest values of building permits in 2025, at US$9.15 million. In Austin, Fort Lauderdale and Fort Worth, these numbers aren’t so drastic. Austin has high growth in housing searches coupled with moderate population growth, despite boasting the lowest cost of living index across the top scoring cities. Austin is a popular destination for property investment, with reasonable demand and realistic living conditions for existing residents.
While these cities saw the highest overall scores, let’s dive into the specific areas of growth in the US.
St Louis, Portland and Miami show the strongest growth in housing search demand, likely because of increased migration. The rent-to-income ratio in St Louis and Portland is manageable, but cost of living continues to creep north, reflecting both an imminent affordability problem and possible opportunity for property investment for prospective buyers.
On the other hand, Phoenix and Tampa saw around 8% fewer housing searches in the last 12 months, indicating lower housing demand and popularity amongst home buyers.
Miami takes the lead in population growth with a 2.35% increase year-on-year, followed by Fort Worth at 2.17% and Orlando with 2.08%. Higher population growth means rising demand and competition for housing, as families upsize and move into metropolitan areas.
On the other hand, St Louis, San Francisco and New Orleans are witnessing the opposite – a reduced population can lead to more homes than residents, creating opportunities for cheaper homes, while the prospect of selling typically becomes significantly more trying.
Building permits have the greatest value in Texas, more specifically in Dallas, Austin, San Antonio and Fort Worth which all saw building permits exceed US$51 million. This value shows that substantial infrastructure development is underway, and areas in Texas are poised for further transformation.
Building permits in Anchorage, Honolulu and Albuquerque are of far less value compared to their Texan counterparts, and all three cities saw a decrease in housing search demand. With this in mind, it’s likely these cities are seeing minimal, if any, infrastructure development in the short-term.
We analysed 12 cities across Australian states and territories and found the following saw the highest total score:
Sydney ranked highest overall, even though housing searches fell, driven by moderately high population growth, the largest number of priority infrastructure projects, and highest rent-to-income ratio.
Based on the analysis, the bottom scoring cities in Australia were:
These cities ranked as having minimal infrastructure projects underway, lower than average population growth and some of the lowest rent-to-income ratios.
Interestingly, Cairns was the only Australian city to see an increase in monthly housing searches, while major cities like Sydney (-3.75%) and Melbourne (-3.54%) saw the biggest declines.
On average across all Australian cities analysed, search volume declined by 2.13%.
Population is increasing across all cities, with the Gold Coast experiencing the fastest growth at 22.04%, followed closely by Brisbane at 21.96%, highlighting strong interest and ongoing migration demand across South East Queensland.
Melbourne (19.53%) and Canberra (19.89%) have also seen high population growth over the past 10 years, signalling rising demand and increased competition for housing.
Monthly non-housing costs are high across Australia, with an average rent-to-income ratio of 44.18%, showing households are facing ongoing financial pressures.
Sydney’s rent-to-income ratio sits at 58.46%, while the Gold Coast follows at 56.81%, highlighting rising affordability concerns for local renters and buyers. These two cities also recorded the highest monthly costs excluding housing, suggesting that gentrification is already taking hold.
The property investment market across Australia differs dramatically by city. Sydney leads with 15 priority infrastructure projects, followed by Melbourne with 12. Townsville, on the other hand, has none, while Cairns, Darwin and Newcastle all have one priority infrastructure project.
Areas with a high volume of projects are likely to experience greater increase in housing demand and more significant transformation, as their infrastructure is being actively developed for growth. In contrast, areas with few or no projects are less likely to see such changes.
“Cities with fast-growing populations, rising housing demand and major new infrastructure investment often become more desirable places to live, but they can also see living expenses rise quickly,” Stephen Zeller, General Manager of Money at Compare the Market says.
“As areas become more desirable, demand for housing tends to rise, pushing up prices and putting pressure on affordability. This can make it increasingly difficult for first-home buyers and renters to enter the market, even in cities known for their long-term growth potential.
“When considering buying in an up-and-coming area, it’s important to look past the hype. Focus on what you can realistically afford, how much of your income would be tied up in repayments, and whether the area suits your long-term needs and lifestyle.
“When you’re ready to buy, taking the time to compare home loans can make a big difference. Even a small drop in the interest rate could save you thousands over the life of a loan, while features like offset accounts, redraw facilities and low ongoing fees can also make a loan more manageable.
“Growth is a promising sign for any city, but it’s still important for buyers to do their homework and compare their options before making a move.”
While gentrification can involve cultural and social change, this index defines gentrification strictly as a financial and demand-driven process. We focus on measurable indicators that signal increased demand from new residents, rising living costs, and growing affordability pressure.
This approach reframes gentrification as an economic shift that may affect housing accessibility, mortgage stability, rental affordability, and long-term financial resilience.
We developed two separate indexes – one for the USA and one for Australia – ranking cities based on measurable indicators of rapid urban transformation.
Each city was scored across five key factors:
Each factor was normalised to a score between 0 and 1. Missing data was assigned a score of 0. All five factors were weighted equally (20% each), combined to produce a total score out of 100.
Higher scores indicate stronger signals of demand acceleration, affordability pressure and infrastructure activity associated with gentrification-style transformation.
Data source: DataForSEO
For each city, we collected 12 months of Google search volume data across a structured set of relocation and housing-related queries.
We calculated the average monthly percentage rate of change in search volume over the past year. This metric acts as a proxy for:
USA: Annual percentage population change (World Population Review)
Australia: 10-year percentage population change (Wikipedia, sourced from ABS data)
Population growth reflects inflow pressure and increased demand for housing.
Due to differences in data availability, the USA index uses annual percentage change, while the Australian index uses long-term 10-year percentage growth. Both are used to capture relative demand momentum within each country.
USA: Numbeo Cost of Living Index (excluding rent)
Australia: Estimated monthly living costs for a single person (excluding rent), sourced from Numbeo
This metric captures broader affordability pressure beyond housing, including groceries, transport and general expenses. Due to limited availability of cost-of-living index scores for Australian cities, estimated monthly living costs were used instead. Both measures act as proxies for rising everyday financial strain. Higher values indicate greater cost pressure.
Data source: Numbeo
Calculated using:
This ratio reflects how quickly renting becomes unaffordable relative to local earning power. Higher ratios indicate greater rental affordability pressure.
USA: Total value of residential building permits (2025), sourced from US Census Building Permits Survey
Australia: Number of major infrastructure projects listed on the Infrastructure Australia Priority List
Infrastructure activity signals investment, development and potential future demand increases.
Although measured differently in each country due to dataset availability, both metrics aim to capture areas experiencing active or planned development that may drive transformation.
Each factor was normalised between 0 and 1 within each country.
All factors were weighted equally (20% each).
Cities were then ranked from highest to lowest total score within their respective country.
Cities included in the study were selected based on data availability across all five metrics. In some cases, cities were excluded where sufficient data could not be collected. Because different data structures were available in the USA and Australia (particularly for population and cost-of-living metrics), slight methodological differences exist between the two indexes. However, the conceptual framework and weighting remain consistent. This index reflects measurable economic signals and search behaviour but may not capture every local factor influencing neighbourhood transformation at suburb or postcode level.
All data is accurate as of 23/02/26.
Sources used: