Sydney’s $500k homes vanishing as $3m+ areas explode
Sydney now has less than 20 suburbs where homes cost below $500k while there has been a surge in areas where $3m+ prices are the norm.
Sydney suburbs where it’s possible to score an average home for less than $500,000 are becoming an extinct species while the number of suburbs where $3m-plus prices are the norm has ballooned.
New PropTrack data showed there were now just 19 suburbs where the typical home could be snapped up for under $500,000, down from 25 at this time last year.
Home prices of over $3m were now the norm in close to 100 suburbs, up from 74 at this time last year. These suburbs represented about one seventh of the city market.
Nearly all the sub-$500,000 areas were unit markets spread across Sydney’s rural fringe or located in The Central Coast.
It’s a marked change from the mid-2000s when the citywide median house price hit $500,000 for the first time, a development that sent shockwaves around the country at the time.
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“It is getting harder for first-home buyers,” said Angus Moore, economist at PropTrack.
“More affordable areas have tended to see faster price increases over the past two years and, with rates being higher, affordability is already the worst in decades.”
At the other extreme, house prices above $3m have become increasingly common, according to PropTrack.
This price range was considered an elite category of housing as recently as five years ago, when only 16 suburbs had these kinds of prices – all of which were luxury areas dotting the Sydney Harbour.
Among the suburbs that joined the not-so-exclusive-anymore $3m club this year were inner west suburbs Russell Lea, Haberfield and Concord, along with northern beaches suburb Dee Why.
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Other new $3m suburbs were north shore enclaves Lane Cove West and Naremburn, along with Burraneer in the south and Arcadia in Sydney’s northwest.
Mr Moore said growing prices at the top end of the property market reflected a big mismatch in household incomes and the fact many upsizers were using equity in their previous homes to bid prices up.
“Sydney is a higher income city and that’s what supports some of these higher prices but the problem is there are large swathes of the workforce who aren’t on higher incomes relative to other cities.
“It’s these lower income buyers who are seeing their housing options diminish.”
PropTrack revealed that Greater Sydney’s cheapest suburb was Berkeley Vale on The Central Coast, where the median unit price was $335,000. Most of the units there were located in over 55s complexes.
Other suburbs with a median unit price below $500,000 were Carramar, Cabramatta, Fairfield and Warwick Farm in the southwest, among others.
The cheapest suburb to purchase a freestanding house was Spencer, an isolated pocket of The Central Coast hinterland, where the median was $490,000.
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The next cheapest suburb to buy a house was Blue Mountains suburb Mount Victoria, where the median was $690,000. Southwest suburb Airds had a median house price of $730,000.
Adam Trouncer, co-founder of non-bank lender Sucasa, said home buyers were being squeezed on two fronts: prices were rising while their borrowing capacity was strained.
“Even with the rise in interest rates, house price growth has remained robust. This has increased the deposit hurdle as a barrier for lots of aspiring home buyers,” Mr Trouncer said.
“There’s no doubt that with housing supply growing slower than our population, and house prices growing faster than incomes – housing affordability for everyday Australian is moving in the wrong direction.”
Ray White chief economist Nerida Conisbee said an interest cut may not make it all that easier for first-home buyers.
“We’re anticipating a lift in prices if interest rates are cut in the middle of the year,” she said.
“The reality is that the entry level price of units in Sydney is about $700,000 and opportunities to buy under that have become rare.”
Originally published as Sydney’s $500k homes vanishing as $3m+ areas explode