How to save millions on buying property in Melbourne and Sydney

New figures have revealed that homebuyers could save up to $2.4 million if they simply go five minutes further on the same train line.

Property hunters dismayed by skyrocketing house prices could save as much as $2.4 million in Melbourne by simply travelling just one or two stops more from their dream suburb.

Domain data has revealed that choosing a suburb an extra five to 10 minutes on the same train line could nab people savings in the hundreds of thousands.

The Frankston line, which takes commuters out to Melbourne’s south eastern suburbs, offers the best deals for those who can’t afford the exclusive neighbourhood of Toorak.

A typical house in Armadale, which is just one stop away from the luxurious area, costs $2.53 million compared to Toorak’s whopping $5 million house values.

This means buyers could save a difference of $2.4 million buying property in Armadale compared to Toorak.

Abercromby’s Real Estate Armadale director Jock Langley told The Age that the suburb of Toorak was so popular because it provided a huge return on investment.

“Traditionally, property in Toorak performs about 5 per cent better than any other region in the city, or across Victoria, over a period of time,” he said.

Forget buying in Toorak. Picture: Nicole Garmston

A home in Armadale will cost almost half and is just a few stops away.

Melbourne’s best bargains

To the east of Melbourne’s CBD, Canterbury’s typical house price topped over $3.1 million, yet travelling just two more stops on the Belgrade line to Surrey Hills, could see people score a place for $2.2 million meaning savings of $912,500.

One of the best bargains to be had is in the northern suburb of Reservoir in Melbourne where buyers could score a house for under $1 million, with a typical price of just $840,000.

This compares to Preston which is just two stops away, yet houses typically cost $1.15 million, offering buyers a saving of $310,000 between the two suburbs.

But real estate agents have warned that people should get in quick as places within walking distance of the new Reservoir train station were being snapped up quickly.

Travelling just a few stops in Melbourne can nab you a bargain. Picture: Supplied

The situation in Sydney

In Sydney, the price gaps weren’t as significant but rea.com.au data showed people could still nab a bargain.

In the north, a typical house in Bella Vista costs $1.35 million yet going one stop further on the Metro to Norwest could save home buyers $840,000, while there was a saving of $810,000 by purchasing in Chatswood compared to North Ryde.

A Pymble house would set people back $3.2 million, yet people could save $589,000 by scoring a property in Gordon.

Small, but still significant savings were on offer for areas like Auburn where a house typically costs $1.04 million, but savings of $393,000 could be made by moving out to Lidcombe, while buying in Canterbury instead of Campsie could save someone $333,500.

To Sydney's south, Miranda’s typical house price is $1.6 million yet savings of $330,000 could be on offer by purchasing in Caringbah, while buying in Oatley would mean $311,000 more in the bank compared to Como.

The difference in Sydney isn’t as dramatic. Picture: Bianca De Marchi/NCA NewsWire

Paul Ryan, economist at REA, said the most desirable places to live used to be close to the city centre where most people worked but the pandemic had changed things.

“More space has become a bigger priority for people over the past couple of years as they spent more time in their homes and they want bigger houses for home offices,” he told news.com.au.

“The fact people aren’t commuting every single day means they are willing to make trade offs for a longer commute but for cheaper prices and bigger dwellings with a backyard.

“Purely by moving one stop further down the line, prices for houses are almost at $1 million less in some areas.”

What’s happening with Sydney apartments?

When it came to units in Sydney, the price gap wasn’t as big but Mr Ryan is predicting big things for the apartment market.

Most notable in the figures were savings of $269,000 for buying in Lidcombe instead of Auburn and a $254,000 difference between Chatswood and North Ryde.

Buying in Beecroft compared to Pennant Hills saved $208,000, while in the inner west despite one stop separating them buying in Sydenham saved someone $111,500 instead of property shopping in Tempe.

“One stop further down the line can save $100,000 and for a lot of people (considering) prices in the past two years, that makes a big difference,” Mr Ryan.

“In Belmore, the unit price is still under $500,000 which is a reasonably accessible price for first home buyers and with units they are still dwellings that have good connections to transport links, which will hopefully become more important this year.”

Chatswood apartments are cheaper than North Ryde.

One of the big stories has been underperformance of units as there hasn’t been as much demand as people want more space and investors have been spooked by the lack of immigration and uncertainty around tenant demand, he added.

“So unit prices have underperformed and the differential between houses and units has been huge,” he said.

“But well located units should stand to outperform in the next year or two to catch up with the extent to which we have seen the growth in houses in the past two years.”