What are the most affordable and liveable suburbs for first home buyers?

The most affordable and liveable suburbs for first home buyers have been revealed, in a new report that considers price growth, local amenities and attractiveness to investors.

In Sydney, top picks were suburbs in the city’s south including Miranda, Peakhurst and Riverwood, while in Melbourne, Greensborough and nearby Briar Hill in the northeast made the list along with Mulgrave in the southeast, according to the PRD Affordable and Liveable Property Guide, First Half 2022.

Will first home buyers get a chance to purchase now prices are slowing?Credit: Peter Rae

The ranking focused on suburbs within a 20km radius of the CBD that have positive or close to neutral price growth, an average or above-average rental yield, a high pipeline of new development projects, low crime rates, amenities within 5km and a below-average unemployment rate.

It comes as the property market slows down after its pandemic era boom as buyers prepare for a series of interest rate rises and adjust to a new home lending rule introduced last year that trimmed maximum borrowing capacity.

PRD Real Estate chief economist Dr Diaswati Mardiasmo said some first home buyers might get a chance to purchase now the market has started to slow and government assistance is on offer, and highlighted “diamond in the rough” neighbourhoods that buyers may have overlooked.

“A lot of the time with first home buyers, there’s a tendency for them to be locked into areas they’ve lived all their life,” she said. “This report asks you to cast your net wider.”

She said when buyers think of affordability, they associate it with being cheap, but a cheap suburb might not have transport links or amenities. And although the criteria for the report are “quite basic - we’re not making sure there’s an entertainment centre nearby, or an art gallery,” the ranking offered suggestions that may not be so familiar to buyers.

For buyers looking further afield, on the Gold Coast, the report suggested Oxenford, Carrara and Mudgeeraba; in Brisbane, Tingalpa, Geebung and Lota; and in Hobart, Warrane, Mornington and Clarendon Vale.

Mardiasmo warned buyers in the market that rising interest rates could reduce their borrowing capacity, pushing down property prices but also reducing how much they can bid at auction.

Laing + Simmons Miranda co-principal Peter Green said his neighbourhood has always been an area that has appealed to first home buyers.

Miranda offers train links to central Sydney at a lower price point.Credit: Highland Sutherland Shire and St George

“Miranda has got the facilities of the large Westfield, it’s only 10 minutes drive to the beach and you’ve got transport with the train station,” he said.

“It’s a good place for young people to start.”

He has noticed several investors selling their properties to first home buyers recently, although added this has reduced the stock of rental properties available and started to push rents higher.

Sales prices are starting to trend downwards slightly, he said, with two-bedroom townhouses and villas on offer from about $900,000 and entry-level three-bedroom homes starting from the $1 million to $1.1 million range.

“There is definitely a trend where prices are coming back, they’re levelling off - certainly a good opportunity for first home buyers to get into the market now,” he said.

In Melbourne, Darren Jones Real Estate director Ashley Croall has also been fielding first time buyers in Greensborough and surrounds.

“A large percentage [of buyers] are residents, that have grown up in the area and chose to buy in the area they’ve grown up in,” he said.

“We get a number of first home buyers from out of area coming in because it’s still, I would argue, value for money given the infrastructure and where we’re located.”

Greensborough is drawing local and out-of-area first home buyers.Credit: Barry Plant Bundoora

Proximity to the city and the train link are drawcards, as well as sought-after schools and the family-oriented nature of the area, he said.

“A lot of people come to set down their roots for future endeavours,” he said.

“We have a lot of our clientele that will sell, that have been in their home for 30, 40, 50 years.”

Townhouses are on offer starting from the mid-$700,000s range, while entry-level houses would start from the mid $800,000s to $900,000 depending on the condition of the house, he said.

He expects a consistent market over the winter period, even as more interest rate rises loom.

“People will always, for personal reasons, have to buy and sell, so there’s always buyers in the market, and sellers,” he said.