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Best suburbs for first homebuyers to purchase a house in Australia

House prices in Sydney have risen by $280,000 in just the first eight months of the year, as younger people face a huge challenge to get into the property market.

Australians looking to buy their first home take an average of 8.6 years to save a 20 per cent deposit and this “marathon savings hurdle” represents the highest barrier to home ownership, a new report has found.

Sydney house prices have skyrocketed by 23.3 per cent over the first eight months of the year to a new record median of $1.29 million, the report from McGrath real estate company revealed.

“This is the fastest growth rate in Australia and equates to a value uplift of $280,000 since January 1, 2021 – equivalent to more than double Australia’s average household income over an entire year,” said founder John McGrath.

The top growth suburbs were Sylvania Waters in Sutherland Shire, which grew a whopping 64.8 per cent to a median $2.7 million and Bardia in the Campbelltown LGA, which was up by a huge 62.5 per cent to $703,900.

Other top performers included Catherine Field in the Camden LGA, which soared by 53.2 per cent to $678,000, and Glenorie in the Hills Shire up 48.3 per cent to $1.93 million.

“Young buyers in NSW, who borrowed a record $2 billion in May 2021, are favouring affordable suburbs in Sydney’s west and southwest such as Box Hill, Schofields, Austral, Oran Park, Campbelltown, Wentworthville and Liverpool,” Mr McGrath said.

“Favourite regional suburbs include Hamlyn Terrace and Gosford on the Central Coast and Wollongong on the south coast.”

First homebuyers would have little chance nabbing something in the city’s inner west. Picture: NCA NewsWire/Christian Gilles
First homebuyers would have little chance nabbing something in the city’s inner west. Picture: NCA NewsWire/Christian Gilles

Melbourne’s property market wasn’t as killer compared to Sydney. The Melbourne median house price rose 14.9 per cent to $954,496 and apartments rose 6.6 per cent to $615,909 over the first eight months of 2021, the report found.

This was just a little under the national average of 17.5 per cent and 10.2 per cent respectively.

Popular suburbs among first homebuyers include Richmond, Mount Waverley, Croydon and Shepparton, as well as Tullamarine-Broadmeadows, Melton-Bacchus Marsh and Casey-South.

Victorian regions were the big winners with more than 14,000 people moving there over the past year to March 2021.

House prices increased by 18.5 per cent in Bendigo, 12.2 per cent in Ballarat and 11.3 per cent in Geelong during this period, the report said.

Better news outside Melbourne and Sydney

But there could be good news for first homebuyers looking for affordable options.

Despite major price growth in the 2020/21 financial year, Queensland continues to offer exceptional value to buyers, according to the report.

Brisbane’s median house price rose by 14.8 per cent to $657,551, while the median apartment price increased 5.7 per cent to $415,536.

But for those looking for a treechange, regional Queensland’s median house price leapt 17.8 per cent to $458,839.

However, there were 22 suburbs in Brisbane and 25 in the regions that hit the million-dollar median up to May 31 this year.

A large percentage of them are in Brisbane’s inner city and south, including Morningside, Alderley, Kelvin Grove, Carindale, Robertson, Camp Hill and Yeronga, the report found.

John McGrath, founder and executive director of McGrath Estate Agents, has revealed the state of the Australian property market. Picture: John Feder/The Australian
John McGrath, founder and executive director of McGrath Estate Agents, has revealed the state of the Australian property market. Picture: John Feder/The Australian

All of the regional suburbs are on the Gold Coast and Sunshine Coast, reflecting the popularity of these centres among southern city seachangers.

“Southern city buyers with healthy budgets are bidding up prices on Queensland’s best homes,” Mr McGrath said.

“The influx of new residents has sparked a development boom in Queensland, including the planning of whole new townships such as ‘SkyRidge’ on the Gold Coast, which will have 3500 new homes and is due for completion in 2036 and ‘Shoreline’ at Redland Bay, 43km southeast of Brisbane, which will have 3000 new homes and is due for completion in 2041.”

Queensland’s magnetic force will only strengthen in the coming year, as the new work-from-home era allows thousands of Australians to make their once favourite holiday spot their new home town, he added.

“Queensland is the value buy of the east coast and offers the quintessential Australian lifestyle in the sun,” he said.

Research from Australian mortgage broker platform Hashching also found Queensland has become a sanctuary for first homebuyers with one suburb standing far above all others. Toowoomba, 125km west of Brisbane, recorded a fifth of the state’s first homebuyer transactions taking place, according to its data.

Nearby suburbs St Aubyn and Walliebum were also popular.

What’s happening in Queensland shows there is hope for first homebuyers, said Hashching CEO Arun Maharaj.

“With such a massive percentage of first homebuyers choosing Toowoomba and its surrounds, the city can pride itself on creating the right mix of affordable housing, employment opportunities and transport to tempt first homebuyers to start their journey there. NSW and Victoria should take notes,” he said.

“The [Sydney and Melbourne] housing market has not created appealing centres of entry-level property for this embattled group. This results in buyers choosing to save more and compete with buyers higher up the ladder rather than relocate, or to choose to purchase their first home elsewhere.”

Ms Maharaj said the data shows the first homebuyers from Sydney and Melbourne are seeking “refuge”in cities like Hobart and Adelaide.

Escaping the cities

It’s also prompting a new trend: Generation Xers and Millennials, particularly those with young families, are joining the VESPA movement – Virus Escapees Seeking Provincial Australia – and moving away from the city centres, the McGrath report revealed.

“Latest data reveals that people aged 25-44 years are the second largest age cohort leaving capital cities, behind the 45 to 64-year-olds,” Mr McGrath said.

“There was a net loss of 11,845 people from the capital cities in the March 2021 quarter, the largest quarterly net loss through internal migration on record.”

It’s caused a regional boom across Australia, with the regions outpacing the capital cities significantly.

Regional NSW home values rose 21.1 per cent versus 15 per cent in Sydney, while regional Victoria saw a gain of 15.9 per cent compared to 7.7 per cent in Melbourne.

Even regional Queensland soared by 17.1 per cent compared to Brisbane’s growth by 13.2 per cent, according to CoreLogic.

Famous for the rich and beautiful flocking there, Byron topped the regional house price growth in NSW, which jumped 39.3 per cent, followed by Kiama at 31.1 per cent. Ballina and Shoalhaven also experienced big increases.

In Victoria, Mansfield had the highest house price growth at 26.9 per cent, followed by the Surf Coast, Macedon Ranges, Bass Coast and Mornington Peninsula.

For Queensland, the top five were Noosa, Sunshine Coast, Fraser Coast, Gold Coast and Cairns.

ACT boom

Meanwhile in the nation’s capital, Canberra’s median house price rose by 20.6 per cent to a new record high of $933,960 in the year to September 1, 2021 – the second highest gain of the capital cities and just shy of the frontrunner Sydney at 23.3 per cent, the McGrath report found.

Suburbs popular among first homebuyers include Dunlop, Kambah and Amaroo, according to Hashching research.

“First homebuyers in the ACT are being pushed to the outskirts of Canberra, in all directions,” Mr Maharaj said.

The Australian Housing and Urban Research Institute found that home ownership was expected to drop to just above 50 per cent by 2040 – down from 60 per cent in 1981 – for households in the 25-55 age bracket.


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