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Falling prices making access to liveable suburbs easier for buyers

Melbourne is now the most affordable city to purchase a house in a suburb that is considered “liveable” according to a new report.

PRD’s Affordable and Liveable Property Guide, for the second half of 2022, found price drops across Melbourne have seen the premium paid for a liveable suburb fall to just 16 per cent above the Victorian state average loan.

At the start of the year, a buyer would have had to pay an additional 62.2 per cent on top of the average loan to purchase in a liveable suburb in Victoria.

A liveable suburb is considered one that is within 20km of the capital city CBD, has low crime rates, availability of amenities, development potential and meets certain investment and affordability criteria.

The report said rising interest rates had caused property price growth slow to single digits on an annualised basis, opening the door for more first-time buyers to access high-quality suburbs.

“Affordability has returned to Melbourne, creating new opportunities for buyers,” the report said.

The report found Point Cook in Melbourne was the most affordable and liveable suburb to buy a house in, with a median house price of $750,750.

Mill Park ($789,000) and Clayton South ($905,000) were also affordable options in Melbourne for houses.

In Sydney, Parramatta ($1,425,000), Peakhurt ($1,443,000) and Banksia ($1,475,500) were found to be most affordable and liveable suburbs.

For Brisbane, ​​Alexandra Hills ($745,000), Capalaba ($780,000) and Oxley ($840,000) all featured on the affordable and liveable houses list, while in Hobart, Lutana ($616,000), Glenorchy ($602,500) and Berriedale ($660,000) all ranked highly.

Meanwhile, Sydney has emerged as the most liveable capital city in terms of unit prices according to the report.

The report found Harris Park ($452,500), Riverwood ($599,000) and Parramatta ($600,000) to be the most affordable and liveable unit markets in Sydney.

“Again, this is a result of the softening in its market,” the report said.

“Sydney unit buyers can take advantage of a 30 per cent reduction off the NSW state average.

“In comparison to Brisbane and Melbourne, this discount is substantially higher. 

“In contrast, Hobart is the most costly, requiring purchasers to borrow an additional 16 per cent over the average loan in Tasmania.”

In Melbourne, the most affordable and liveable unit markets were in Mill Park ($510,000), Abbotsford ($532,500) and Windsor ($545,000).

While in Brisbane, Doolandella ($350,000), Murrumba Downs ($378,000) and Griffin ($430,000) were all declared as affordable and liveable unit markets, along with Rokeby ($540,000), New Town ($522,500) and Glenorchy ($475,500) in Hobart.

According to the report, an increasing number of suburbs with negative growth were evident in all capital cities. 

In Melbourne, more than 20 suburbs were excluded because the median house price fell between 2021 and 2022, while more than 60 suburbs saw the median unit price fall, giving first-time home buyers more opportunity.

The report said, first-home buyers looking for the most affordable opportunities have a greater chance in Sydney and Melbourne.

“This is from a comparative price-band perspective rather than a dollar value perspective,” the report said.

“First-home buyers have a 9.6 per cent chance in Sydney’s most affordable price bracket, the highest of all capital cities, compared to a zero per cent chance in Hobart.”

In terms of median price, Sydney is still the most costly capital city for homes according to the report.

“It’s interesting to note that Brisbane and Melbourne’s median home prices are quite similar, which presents a dilemma for the citizens of each capital city,” the report said.

“Given that Brisbane was once referred to as Melbourne’s ‘little brother’, affordability for Brisbane residents has decreased.

“First-home buyers in Melbourne have seen affordability increase, due to a softening in their market.

“The unit markets in Melbourne, Sydney, and Hobart are seeing a comparable phenomena, with comparable median prices in each city. 

“Overall, this provides a balancing act between the capital cities from a value viewpoint. 

“We can no longer identify a single capital as being the most costly or the most inexpensive due to the existence of markets within markets based on the type of property and location.”

Comparatively, Hobart metro dominates the premium end of the market with market, with 61.7 per cent of home sales and 45.5 per cent of unit purchases taking place in the premium market. 

This is nearly twice as much as the premium house (37.3 per cent) and unit sales (45.5 per cent) in Sydney metro, highlighting the significant affordability issue in Hobart metro, which is most likely due to the lack of new property stock entering the market in 2022.

Meanwhile, Sydney and Melbourne’s lower-mid and middle-priced markets have expanded. 

The middle price range for houses in Sydney and Melbourne accounted for 25.2 per cent and 13.2 per cent of sales, respectively, up from 27.4 per cent and 13.8 per cent. 

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Rowan Crosby

Rowan Crosby is a freelance journalist specialising in finance and real estate.