Cheap Sydney real estate: where you can afford to buy a house if you earn $80,000 a year or less

They’re the islands of affordability within a sea of sky high prices – the unlikely Sydney pockets where the homes remain within reach of lower income earners, according to new research.

They’re the islands of affordability within a sea of sky high prices – the unlikely Sydney pockets where the homes remain within reach of lower income earners.

A new housing study has revealed 25 suburbs where those who earn about $60,000 in annual household income can afford to buy a home without breaking the bank – provided it’s a unit.

There were also 13 suburbs where the average detached house was affordable for those with a household income of about $80,000 and enough savings for a 20 per cent deposit.

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It comes as CoreLogic data published this week showed the Harbour City’s median house price was on the brink of hitting $1.3 million after climbing 26 per cent over the past year.

This level of growth was the fastest recorded in 32 years and came off the back of already high prices – the median house price was about $1.03 million last year.

My Housing Market economist Andrew Wilson said price rises were so extreme that even higher income buyers were beginning to reach the limits of their borrowing capacity.

The median price of a Sydney house is approaching $1.3m.

“Even with low interest rates, prices have overreached people’s capacity to borrow in a lot of areas,” Mr Wilson said.

The majority of the city’s more affordable suburbs, where prices did not grow as rapidly, were in Sydney’s west.

Suburbs where there was an abundance of units priced under $480,000 – affordable for those earning about $60,000 – included Penrith and nearby Kingswood.

Other suburbs with similar prices were Lakemba, Punchbowl and Wiley Park, in the Canterbury-Bankstown region, along with Granville, Harris Park and Regents Park in the Parramatta area.

The cheapest suburbs to buy a freestanding house included Cartwright in the southwest, along with Blacktown suburbs Hebersham, Emerton, Bidwill and Lethbridge Park.

Median prices in these suburbs ranged from $550,000 to $650,000.

Fairfield is one of the cheapest markets for home buyers.

It meant those on $80,000 a year could buy houses without spending more than a third of their income on repayments – a threshold commonly used to determine affordability.

The analysis of CoreLogic and realestate.com.au data assumed they had a 20 per cent and paid an average loan rate of about 2.4 per cent.

Sydney’s average household earns about $110,000 a year and those that take home less than $80,000 are considered within the lower tier of earners, according the Australian Bureau of Statistics.

The most affordable markets within a 10km radius of the Sydney CBD were concentrated in the inner west and inner south and included suburbs Eastlakes, Ashfield, Dulwich Hill and Marrickville.

Finder.com.au home loan expert Sarah Megginson said first-home buyers should run their own race and keep in mind there was always a cheaper alternative to their preferred suburb.

Cheapest suburbs and the minimum household income required to buy at median price

UNITS

Warwick Farm $47,000

Wiley Park/Lakemba $48,000

Jamisontown/Fairfield $50,000

Canley Vale $52,000

Leumeah $53,000

HOUSES

Airds/ Blackett/ Tregear $69,000

Emerton/ Shalvey $70,000

Wilmot/Bidwill/Lethbridge Park $72,000

Whalan $74,000

Hebersham $77,000

Cheapest within 10km of the CBD

UNITS

Eastlakes $77,000

Petersham/Ashfield $90,000

Stanmore/Dulwich Hill $91,000

Newtown/Marrickville $93,000

Chippendale $94,000

HOUSES

Tempe $138,000

St Peters $170,000

Mascot $189,000

Hurlstone Park $190,000

Erskineville $191,000

*With 20 per cent deposit and 2.4% loan rate