Where Melbourne home buyers can save a deposit faster than prices are growing | REIV, Finder
Melbourne homebuyers could be saving money faster than the market is growing in more than 100 suburbs, helping would-be property purchasers catch up. Find out where.
Property
Don't miss out on the headlines from Property. Followed categories will be added to My News.
Flat prices have helped Melbourne’s wannabe homeowners catch up to the market in more than 100 suburbs across the city over the past year.
With interest rates at their highest level since 2011, bank accounts have been supercharged and new figures from the Real Estate Institute of Victoria and Finder show the city’s median house price grew less than a typical household’s savings in 105 suburbs.
There were 126 areas where a household earning from $100,000-$250,000 could have outsaved median price growth for units.
RELATED: Where 41,000 Victorian ex-rentals were listed for sale in last 12 months
Melbourne ghost zones: 100,000 empty homes and where they are
‘Robber barons’: great landlord myth exposed
Finder data suggests conservative savings for households on this income would have been about $14,700 over the past year.
Those stashing away such a sum could be pricing themselves back into the market.
Lower-growth suburbs with median home prices above $1.26m were excluded as those earning $250,000 a year would need more than a 20 per cent deposit to avoid spending more than 30 per cent of their wage on their home loan, a condition known as mortgage stress.
Dromana’s median house price fell to $982,500, which put it at the top of the list in terms of where buyers have caught up the most.
But they also made ground in suburbs like Craigieburn where prices rose $13,000 to $660,000, and Melton West, which gained $14,500 to reach $549,500.
Real Estate Institute of Victoria president Jacob Caine said the data suggested affordability had improved from lifestyle areas like suburban Ringwood to residences along the eclectic streets of Collingwood.
“Melbourne real estate agents are famous for saying it’s never cheaper to buy than today, but the past 12 months have shown that’s not necessarily always the case,” he said.
“It’s actually possible you could have saved faster than the market grew in a lot of areas.”
However, Mr Caine warned buyers might not have long to make their move before more suburbs took off — with interest rate cuts still possible within the next year.
“For the next six months the market is likely to remain relatively flat or stable,” he said.
“But the prospect of interest rate cuts in the new calendar year will potentially lead to a significant surge in buyer activity in the start of 2025.”
The Finder figures also revealed two suburbs, Melton and Melton South, where those earning $50,000-$99,000 would have outsaved the market and, with a 20 per cent deposit, could still afford a house without going into mortgage stress.
There were another 21 suburbs where a person earning this income bracket, who would typically save $6852 in a year, would have caught up with the median unit price.
Finder money and home loans expert Sarah Megginson said that despite the rising cost of living, saving for a home today had been given a boost by rising interest rates.
“It’s very easy to get over 5 per cent in a high-interest savings account,” Ms Megginson said.
That means households with $100,000 in savings, a 20 per cent deposit for a $500,000 home, could be getting paid $5000 a year in interest from the bank.
Ms Megginson said the scenario that had played out over the past 12 months was a clear example of why those who were saving for a home should never give up their efforts to save — even if they feared the market was leaving them behind.
However, she warned buyers off waiting too long to make a move, if they had the funds to do so.
“We are in a really unique time now,” she said.
“But while you might out-save the market this year, the next year that might not be the case again.”
For those still hoping to supercharge their savings, Ms Megginson advised ensuring you were getting at least 5 per cent return on your savings in a high-interest, but easily accessed account was a vital first step.
Next, annual bill check ups where you review regular outgoing costs could also add several months to your bank balance in money saved on bills for energy, water, gas and insurance.
Beyond that, one of the best ways to boost savings is to partner up, move into a sharehouse or even back in with your parents, as this will mean you are able to boost individual savings by sharing the costs of internet, energy, water bills and groceries.
YPA Sunbury director Patrick Kilkenny said while buyers might seem to have caught up with the area’s property market, it was likely a significant rise in the number of investors selling homes had led to lower quality homes bringing the median price down.
While that could mean buyers would find more choices at the more affordable end of the market, Mr Kilkenny noted it did not necessarily mean individual home prices had fallen.
“It has softened, in terms of demand, but you can still see good numbers for the right home,” he said.
“But it’s definitely time to buy, and there are a lot of first-home buying today.”
Sign up to the Herald Sun Weekly Real Estate Update. Click here to get the latest Victorian property market news delivered direct to your inbox.
MORE: Former Richmond captain Jack Riewoldt quietly sells his Brighton house
Melbourne housing crisis: 800 new social and rental homes across Melbourne by 2026
Tania Buckley hits tough 120-day milestone as Toorak mansion lingers on the market
More Coverage
First look: New Coast shopping centre for surprise site
A long-empty site in a surprise location will be transformed into a retail showroom complex under fresh plans lodged with the council. FIND OUT WHERE
Revealed: How much rent you need to pay in every Qld suburb
Rents have increased again in 252 Queensland suburbs, reversing the brief downward trend recorded just three months ago. See how your suburb compares!