House hunters will find the cheapest median prices within 10 kilometres of the Sydney’s CBD in a string of inner west and inner south suburbs.
But they will still be hard-pressed to find houses for less than the citywide median price of about $1.46 million, even after the market downturn.
Arncliffe is the only suburb where the median sits below that level, after house prices fell 12.8 per cent to $1,365,000 in the year to March, on Domain data, and scrapes in at 9.7 kilometres from the city centre.
It was followed by Erskineville, 4.3 kilometres from the CBD, where the median is $1,585,000 even after a 9.6 per cent decline, then Botany ($1.61 million) and Redfern ($1,627,500).
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Houses close to the city and amenities continue to command a premium even after the downturn, experts say, and younger buyers increasingly need help from the bank of mum and dad, or to look to apartments, to get into such suburbs.
Domain’s chief of research and economics Dr Nicola Powell said it was very challenging to buy a detached house in inner Sydney for less than the citywide median.
“The more affordable [inner] suburbs are kissing the 10-kilometre distance,” she said, adding those on a budget would need to compromise on property type to purchase closer to the CBD.
“Sydney is a large city and if we want affordable homes close to the city then a unit is the perfect type of property to offer,” she said. “We cannot expect a house is going to be on offer in every suburb across the city.”
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Buyers could purchase a median priced unit in Rushcutters Bay, just 1.8 kilometres from the CBD, for $681,500, a fraction of the cost of houses within a similar distance.
Further afield, they could secure larger units in suburbs like Canterbury ($641,000) and Hillsdale ($650,000), both just within the 10-kilometre radius.
Powell said those buying into inner suburbs were prioritising location, and the vibrancy of inner-city living, over the property itself, and noted a diverse array of housing was essential to provide affordability.
Commonwealth Bank’s head of Australian economics Gareth Aird said proximity to work, schools and transport had always been central to buyers’ decisions but has become unaffordable for many.
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“We’re still talking about homes that are a big multiple of the average income…in fact [these medians] just highlight how unaffordable homes are for [average] new entrants into the housing market,” Aird said.
“It’s getting very hard for first home buyers to get into the market unless they have a degree of assistance given where interest rates are and given the decline in house prices has not offset the increase in interest rates. On that measure, affordability has gone backwards.”
But buyers can still find better bang for their buck in pockets of the inner city, at times by moving one suburb over. Leichhardt’s median of $1,692,500, for example, is well below prices in neighbouring Rozelle ($1,925,000) and Lilyfield ($2,097,500).
Leichhardt seller Pasquale Panuccio said the suburb offered great value for money.
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“It’s a great place for the new couples who want to get in the area … the land is 280 square metres, it’s pretty good bang for buck for what you’re getting,” the 31-year-old builder said.
“It’s got light rail around the corner, you’ve got the bus stops, you’ve got Norton Street up the road.”
He and his brother bought the property as an investment in the hopes of extending the home, but have since had a change of plans.
His selling agent Santos Sulfaro of Cobden Hayson Annandale said buyers from more expensive neighbourhoods were coming through his open homes in Leichhardt and surrounds.
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“It’s natural when people are trying to find value, especially when the economy is in the state it’s in. That will ripple out,” Sulfaro said.
“We’re already seeing open home numbers increase. We’re getting people from Redfern, Surry Hills and Balmain because there is much better value.”
But many buyers, especially first timers, were needing help from the bank of mum and dad.
“A lot of them are getting help from the bank of mum and dad, it’s just more becoming more common now for first home buyer.
“The interest rates have put so much pressure on lending they sometimes need a top-up from their parents either [for] the deposit or stamp duty that makes the difference.”
This article was originally published in The Sydney Morning Herald.