Cost of living pressures and higher interest rates have squeezed more home buyers into cheaper housing markets, leading to a dramatic rise in entry level prices across major capitals.
PropTrack figures revealed price tags below $600,000 were becoming increasingly difficult to find in the house market, while sub-$400,000 deals were close to vanishing altogether in the country’s five biggest cities.
PropTrack economist Angus Moore said competition for the cheapest homes was ramping up.
“More affordable areas have tended to see faster price increases over the past two years and, with rates being higher, affordability is already the worst in decades,” he said.
Some of the biggest changes were in Adelaide – once one of the country’s most affordable markets.
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![Darlington auction](data:image/svg+xml,%3Csvg xmlns="http://www.w3.org/2000/svg" viewBox="0 0 1280 720"%3E%3C/svg%3E)
Competition at the bottom end of the market has been stronger. Picture: Sam Ruttyn
The report showed the number of city suburbs where the average house cost less than $500,000 had whittled down to just six – most of which were concentrated more than 25km north of the CBD.
Entry level prices – or those in the cheapest suburbs – also soared in Melbourne despite home price falls in much of the rest of the Victorian capital.
PropTrack revealed there were now fewer than 20 Melbourne suburbs with median home prices below $600,000, the threshold for the state’s primary assistance program for first-home buyers.
Sydney had just one suburb where houses typically cost less than $600,000 – a semirural enclave of The Central Coast – and there were just 19 suburbs where median unit prices were under $500,000.
Perth was the fastest growing capital this year.
Brisbane had just three suburbs where the median house price was under $500,000 and sub-$400,000 prices for units were a feature of five suburbs.
At a citywide level, Perth had the fastest rises in prices across the year, with prices growing an average of nearly 20 per cent.
The cheapest suburb to buy a house in Perth is Brookdale, in the city’s southeast, where the median house price is $540,000.
“There has been a similar trend all across Australia,” Mr Moore said.
“One of the most important drivers of housing markets is affordability. In the current environment, we are seeing more buyers looking at more affordable options.
PropTrack economist Angus Moore said higher rates had squeezed more buyers into entry level markets.
“We’ve also seen the more affordable capitals perform better and within those capitals it’s the more affordable parts that have done better.
“It means it’s much harder for first-time buyers. It’s not just that affordable areas have seen bigger increases, it’s that affordability is challenged all around because rates are higher and prices are higher in other areas too.”
NEW SOUTH WALES
See the full list of cheapest suburbs in Sydney
PropTrack revealed that Greater Sydney’s cheapest suburb was Berkeley Vale on The Central Coast, where the median unit price was $335,000.
The cheapest suburb to purchase a freestanding house was Spencer, an isolated pocket of The Central Coast hinterland, where the median was $490,000.
VICTORIA
See full list of cheapest suburbs in Melbourne
The Melbourne market has been a mixed bag this year.
Melbourne’s cheapest suburbs included Melton, Broadmeadows, Wyndham Vale and Frankston North, according to PropTrack.
PropTrack economist Anne Flaherty said higher prices in more affordable areas was a warning that the government needed to expand its support schemes for first-home buyers.
At present market entrants do not have to pay stamp duty for purchases up to $600,000, in the most widely used support program for homebuyers in the state.
SOUTH AUSTRALIA
See the full list of cheapest SA suburbs
Adelaide’s most affordable suburb was Elizabeth North, with a median house price of $441,500.
PropTrack indicated there were just six suburbs with a median house price of $500,000 or less. Other cheap suburbs included Elizabeth Grove, Smithfield Plains and Davoren Park.
QUEENSLAND
See the full list of cheapest Brisbane suburbs
Brisbane has been a strong market this year. Picture: Jerad Williams
Just one Brisbane suburb now has a median house price below that number — Russell Island at $392,000.
One local agent said the lower prices won’t last. Chris McGregor of Bay Islands Property said the “last quarter has been incredible”, adding there had been over 30 sales in his office since September.
“Buyers are spending bigger amounts because it is affordable compared to the mainland,” he said.
