While Hobart may have once held the title for Australia's cheapest capital city to buy a home in, soaring house prices have bumped the city in favour of Adelaide.

The median house price in Adelaide is $470,000 compared with $492,000 in Hobart, according to the REIA figures.

Adelaide's figure is well below the national average, which is $770,086.

Property research firm, Core Logic, found five inner-city suburbs in Adelaide that have an average purchase price under $500,000.

They've listed Hindmarsh, Cowandilla, West Richmond, Renown Park and Devon Park as the cheapest suburbs to buy within 5km of the CBD. That's compared to finding a house for the same money 52kms from the City in Sydney and 21.5kms in Melbourne.

This three-bedroom house in Mclaren Vale is for sale between $550,000 and $585,000 as featured on Thehomepage.com.au Image by Raine and Horne.

Related reading: Australians prepared to move interstate for affordable housing, new research shows

Nathan Casserly, an agent at Ouwens Casserly, told WILLIAMS MEDIA that buyers from Sydney and Melbourne are often pleasantly surprised by what they can get for their money.

" The proximity to the CBD really surprises interstate buyers. What they perceive as being value for money in terms of accommodation and land size is appealing, as is the amount of time they end up saving on their daily commute by being able to live close to the city.

"Adelaide provides a good lifestyle with a great work life balance that many people strive to achieve. A lot of that balance is influenced by a city that is so easy to get around, excellent education options and having family close by. This work life balance has been further highlighted as a result of these excellent prices. 

"There's been a significant increase in buyers returning to Adelaide from overseas and the Eastern seaboard," he said.

Even though the city ranked as being the cheapest on the housing ladder, the median house price has actually risen by 1.1 per cent in the March quarter. Rent has also risen in the city, with three-bedroom houses costing $355 per week, a 1.4 per cent increase on last year.

But these hikes are nothing in comparison to those in Hobart - the new median house price is an increase of 7.2 per cent for the quarter, a huge 20 per cent increase on last year.

This 2-bedroom cottage is currently under offer between $670,000 - $685,000. As featured on Thehomepage.com.au

“This is the first time since September 2006 that Hobart hasn’t had the lowest house median price for all capital cities on the back of an increase of 7.2 per cent over the quarter and 20.0 per cent over the previous year," said Malcolm Gunning, President of the REIA.

In May, the Rental Affordability Index showed that Hobart had actually overtaken Sydney as the least affordable capital city in the country for renters, thanks to a combination of skyrocketing property prices and an undersupply of affordable housing. 

Related reading: Hobart housing demand higher than anywhere in Australia.

A "tight rental market"

The median house price also increased in Melbourne, while they fell in Brisbane, Darwin, Perth, Sydney, and Canberra. 

“Canberra had the largest fall in house prices and Darwin had the largest decrease in other dwellings,” Mr. Gunning said.

“Over the quarter, median rents for three-bedroom houses increased in all capital cities except Darwin. Median rents for two-bedroom other dwellings performed better with all cities increasing their medians,” he said.

Mr Gunning said the weighted average vacancy rate for the eight capital cities decreased to 2.6 per cent during the March quarter indicating a tighter rental market.

“Canberra has the tightest market with a vacancy rate of 0.5 per cent which is the lowest rate for a capital city since March 2008 and for Canberra since the early 1980s,” Mr Gunning said.

View 17 Wright Court, Cowandilla, Adelaide (pictured above) on The Home Page.

Related reading:

Melbourne dominates Australia's housing hotspots list

Housing affordability improving across Australia, says REIA report

Adelaide's most affordable suburbs