Despite the cost of living rising and property prices outpacing wage growth, there are still locations where homes are affordable, according to the latest Herron Todd White (HTW) Month in Review.
In the April report, Managing Director HTW Brisbane, Gavin Hulcombe, said population growth had been the big driver of prices and unaffordability over the past few years.
However, there are still pockets within each city that are relatively affordable for buyers.
“The forces of strong demand and insufficient supply have so far seen property markets withstand the huge cost-of-living pressures being encountered by many Australians as a consequence of higher interest rates,” Mr Hulcombe said.
“So far, most housing markets have remained extremely resilient across the country.”
He said often the detached housing market moved first when capital gains flowed through, with the attached housing market lagging behind.
“As the value gap widens between houses and units, then buyers reach a point where they identify good value in attached housing prices,” he said.
“This has been happening of late across most major population centres.”
Mr Hulcombe said there were many locations where the cost to replace units is higher than the cost of buying established – representing a good affordable opportunity for investors.
“Given the cost to produce city fringe units in medium rise towers can be well above the cost of buying an established apartment, many developers are questioning whether it’s viable to proceed with new projects,” he said.
“I see opportunities in unique, well-located units, whether CBD, city fringe or even a little further out, which offer an attractive space to live.
“I am convinced that opportunities to buy below replacement cost still exist.
“Whilst the value of apartments has lifted substantially, so too have costs.
“It is worth doing your homework, but it certainly helps your investment if the cost of producing a new unit next door is 30 per cent more than what you are paying for the one that’s already built.”
Sydney
HTW Director, Shaun Thomas, said for those still wanting to enter the market or considering upgrading or right sizing, the budget for most was a bit slimmer than a few years ago.
“Western Sydney provides great opportunities for those with a more limited budget to still purchase a champagne quality property, or in a champagne quality location, with a beer budget,” Mr Thomas said.
He said in the unit market, they continue to see plenty of opportunities on the Upper North Shore within well regarded suburbs.
Mr Thomas said there were still entry level opportunities in the Eastern Suburbs, but budgets needed to rise.
Melbourne
HTW Director, Perron King, said the Melbourne CBD was typically more affordable for home buyers.
“Geographically, Melbourne’s CBD is not very large and therefore a lot of sections are easily accessible via the extensive public transport systems,” Mr King said.
“However, there are some CBD pockets that have relatively lower prices due to their location and also the supply of that property type.”
He said the western suburbs of Melbourne had many desirable locations with beaches, hospitality precincts, facilities and infrastructure, led by Williamstown.
While in the southeast, the more affordable side of Carrum Downs may have higher appeal to those with a smaller budget.
Brisbane
HTW Director, David Notley, said no matter where you purchase, buying at a below-median priced property in Brisbane would come with compromises.
“As a rule, if a compromise that reduces a property’s value can be easily remedied, then it’s probably worthwhile making,” Mr Notley said.
“There are many suburbs in Brisbane which offer exceptional potential, however our prime examples are areas such as Ascot, Hamilton, New Farm, Teneriffe.”
Adelaide
HTW Valuer, Nick Smerdon, said an abundance of champagne locations can be found within the inner ring of suburban Adelaide.
He said three are still affordable options including Walkerville, Dulwich, Hyde Park, Henley Beach, Glenelg, Semaphore and Brighton.
Perth
HTW Director, Chris Hinchliffe, said there are still opportunities in the most exclusive suburbs that are well below the median price in Perth.
He said suburbs such as City Beach, Como and Nedlands all had a wide range of price points and it was possible to buy well and pay less than the median.
Darwin
HTW Assistant Valuer, Louis Cox, said it was possible to buy well in areas such as Fannie Bay by looking at units or townhouses at lower price points.
Canberra
HTW Assistant Valuer, Tom Atlee, said some of the suburbs identified as having the best locations for finding a good value home included Canberra’s inner south, in particular Yarralumla, Kingston, Red Hill and Forrest.
Hobart
HTW Valuer, Mark Davies, said quality, affordable properties could be found in North Hobart, South and West Hobart, Sandy Bay and Kingston Beach.
