Pockets of hope open up for struggling Sydney homebuyers

Pockets of affordability have begun begin to emerge in Sydney’s overheated property market to the relief of desperate homeseekers. This is where.

Western Sydney’s heartland has emerged as a bastion of hope for first homebuyers, as pockets of affordability begin to emerge in the property market.

PropTrack’s exclusive Affordability Hotspots 2024 report has revealed the Parramatta and South West regions are where young buyers have the best chance at getting a foot in the door in the greater Sydney area.

The report uses PropTrack’s Affordability Index to measure how many homes sold from July 2023 to March 2024 can be deemed affordable for households when spending 25 per cent of their pre-tax income on mortgage repayments.

Daniel Neuman is a first homebuyer and has just purchased a unit in Homebush West for him and his partner Emma Komouthaphong to live in. Picture: Jonathan Ng

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It then gives regions a score based on the proportion of properties that households across all income percentiles can afford.

Parramatta topped the list for Sydney suburbs with a score of 0.49, which means on average, Sydney households can purchase nearly half the homes at their income percentile.

Meanwhile, Canterbury was Sydney’s second-most affordable region, along with Mount Druitt and Liverpool, with scores of 0.46.

Parramatta was highlighted as the most affordable region for Sydney buyers to break into.

Auburn was fifth with a score of 0.42, while Wyong (0.4), Merrylands-Guildford (0.4), Penrith (0.39), St Marys (0.39) and Campbelltown (0.38) rounded out the top 10.

Report author, PropTrack senior economist Paul Ryan, said the index takes into account all incomes, not just a median, across the state.

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“A higher affordability index tells you that households can afford a greater share of homes in that region,” Mr Ryan said.

“This measures the affordability for the people who already live in that city, and is geared towards first home buyers who are borrowing 80 per cent of the home’s value.”

Very few regions remain affordable for Sydney households earning median or lower incomes, Mr Ryan noted.

“Out of all the regions, Sydney households can afford the most properties in (the Parramatta) region, but if you compare it across other parts of the country like in Perth, they are scoring 0.7 which is quite a significant difference,” he said.

“Parramatta has done a relatively good job at building new homes, those regions that have built more homes have kept a lid on housing costs.”

The Parramatta region topped the list in the affordability index. Picture: Jonathan Ng

Mortgage Choice Broker Luke Camilleri specialises in the Parramatta region and said most of his clients were first home owner-occupiers who were drawn to the region due to its affordability.

“When you access first homebuyer schemes and LMI waivers, it makes Parramatta a really good area where you can purchase something with a much smaller deposit,” Mr Camilleri said.

Parramatta two bedroom, two bath, one car apartment sold for $665,000 in April 2023.

First home buyers with a good income could have $30,000 deposit and secure a unit in the $500,000 range in the area, a $50,000 deposit could purchase an apartment in the $800,000 range, according to Mr Camilerri.

He said the average combined income for first homebuyer couples he was seeing was around $150,000 and a good mortgage interest rate was currently circa 6.29 per cent.

“I believe that if we have rate cuts, people’s borrowing capacity will increase and then that will drive prices up. If people can borrow more money, they will because they’ve been set back so much over the huge interest rate rises over the last two years,” he said.

Townhouse in Mount Druitt sold for $581,000 Sold in April 2024. Mount Druitt is one of Sydney’s top affordable hotspots.

“What the RBA actually drops and what the banks pass on, it may only be 10 basis points then it may not make a significant difference. But it could create the frenzy of the ‘fear of missing out’ where people want to get in now,” he said.

Daniel Neuman recently purchased his first property, a two-bedroom two-bathroom unit in Homebush West within the greater Parramatta region, for him and his partner to live in.

Mr Neuman lived at home and saved for nine years working full time for a deposit before purchasing in Homebush West.

He said the main reason he was drawn to the area was affordability.

First homebuyer Daniel and his girlfriend Emma. Picture: Jonathan Ng

“We looked at a lot of different apartments, we were looking for at least six months. Some weeks we would see five or six in a week,” he said.

Mr Neuman purchased his apartment for $660,000 and said he had to push his initial budget higher.

“We had to readjust what we were looking for in the end, for the lower range and definitely wanting a two bedder, it was difficult, a jump from $50,000 up you could see so much better quality properties,” he said.

“To be honest, I thought I was going to be able to borrow more but we started the process when interest rates were going up so it wasn’t so much of a surprise,” he said.

Mr Neuman is a first homebuyer who was able to get into the market by purchasing in an affordable hotspot and saving while living with his parents. Picture: Jonathan Ng

“I was really lucky that I was able to stay and live at home, for the average person who doesn’t live at home it would be very hard to buy, unless you go way out past Parramatta.”

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Originally published as Pockets of hope open up for struggling Sydney homebuyers