Affordable properties hit record low in October

The housing market has hit a historic low, which is bad news for first home buyers even as house prices continue to fall.

The number of houses listed for sale for less than $600,000 in Australia’s cities has hit a record low.

A report by the PropTrack Market Insight Report found the share of properties newly listed for sale on realestate.com.au for less than $600,000 was 35.8 per cent in October 2022.

This number has declined sharply by 16.7 percentage points since the start of the pandemic (March 2020).

The share of properties selling for below $600,000 has hit a record low in Australia. Picture: NCA NewsWire / Damian Shaw

It comes despite significant falls in house prices over recent months as interest rate rises put pressure on the housing market.

Units have not suffered nearly as much as houses, with a drop of just under 7 percentage points since the pandemic.

PropTrack’s director of economic research, Cameron Kusher, said this points towards a growing shift away from house ownership, as prices push lower-income earners out of the race.

“If anything, it highlights that if you’ve got a budget of under $600,000, you’ve got much more opportunity in the unit market,” he said.

PropTrack’s director of economic research, Cameron Kusher, said the latest data highlighted a growing trend away from affordable houses, as more people are forced to turn to units. Picture: Supplied

Mr Kusher said finding an affordable property differs greatly from city to city, with buyers in major capitals like Sydney, Melbourne and Canberra struggling to find properties listed below $600,000.

In regional areas, the fall has been far more significant, where “tree changers” have contributed to a massive surge in property prices. The share of new listings under $600,000 since the onset of the pandemic has reduced from 71.2 per cent to 45.6 per cent since the start of the pandemic.

In capital cities meanwhile, the amount of affordable listings fell from 42.5 per cent to just 30.6 per cent since March 2020.

In regional areas, the share of affordable houses has dropped significantly more than in capital cities. Picture: NCA NewsWire / Dylan Coker

“A lot of people have moved regionally, and these areas used to be the place where you could get properties a lot more affordable than capital cities,” Mr Kusher said.

“Generally, it shows it’s getting tougher right across the country.”

Less than one in five new listings were under $600,000 in October for the Gold Coast in Queensland and Geelong in Victoria.

That share drops to one in 10 in the Illawarra region of NSW.

As property prices continue on a downward trend, Mr Kusher says there is the possibility of light at the end of the tunnel.

Mr Kusher said he expects the pool of properties at this price point will continue to shrink long-term. Picture: Supplied

“If you look at Sydney, there was a slight uptick between last year and this year in the share of listings under $600,000,” he said.

Falling property prices appear to be occurring mostly on the higher end of the market, which is not having a major impact on the share of affordable houses.

“I think in 12 months’ time, with prices expected to fall, we could see that come down more,” he said.

“But I think that trend is quite strong and the next time we see prices go up, we will see that share of affordable houses shrink.”

Originally published as Affordable properties hit record low in October