Surprising amount it costs to buy a top-end home in Sydney now

Do you have a home valued at $1.78 million or more? You might be richer than you think.

Sydney’s median dwelling value is about $1.19 million, including both houses and apartments. But the upper end of the Sydney market – the top 25 per cent of homes – is defined as property worth above $1.78 million.

This Newtown home sold last year for $2.24 million, a price within Sydney’s upper quartile.Credit: Ray White

This threshold may sound low in Sydney’s market where multimillion-dollar transactions are a regular occurrence. Statistically, property below $1.78 million makes up 75 per cent of all homes and the multimillion-dollar properties are in the top one to two per cent.

CoreLogic head of Australian research Eliza Owen said it may surprise people to learn that the upper end of the market doesn’t start at two million or five million dollars.

“In actual fact, a very small percentage of properties in Greater Sydney are valued at having that multi million dollar price tag,” she said.

“We’re talking about, all houses and units across Greater Sydney all the way to the foot of the Blue Mountains. So when you lay out those dwelling values in order from lowest to highest, the high end of the market would be considered the top 25 per cent of values. And the top 25 per cent of value starts at that $1.78 million,” she said.

What type of homes are considered upper end, then? Ray White’s Shaun Stoker listed a three-bedroom property at 107 Union Street in Newtown with a guide of $1.8 million and it sold for $2.05 million.

“From the facade back it has been completely redone. So it’s all-new, new kitchens, bathrooms, the floor plans, new. All the wiring, plumbing has been done,” he said.

“It’s literally a two minute walk to Newtown station and all the restaurants and bars. So it’s really accessible to all the action Newtown offers.”

The property attracted interest from first home buyer young professional couples, Stoker said, and sold before auction.

Owen added that the median household income in Greater Sydney is only about $120,000.

“To afford a $1.8 million property at current mortgage rates, you’d need probably around $400,000 a year, and that’s assuming things like a 20 per cent deposit, a mortgage repayment that constitutes no more than 30 per cent of your income,” she said.

“So for first home buyers, that’s partly why Sydney is such a challenging market. Not only is the deposit hurdle hundreds of thousands of dollars, when you take into account typical property values and transaction costs, but the current mortgage rate settings aren’t affordable for a purchase at the median or the high end of the market,” she said.

Selling agent Stefan Bujak said a budget of $1.78 million would purchase a three-bedroom, unrenovated, original brick home in Arncliffe.

Last year Bujak’s team at McGrath sold a four-bedroom, one-bathroom, family home at 7 Firmstone Gardens for $1.8 million. They also sold a three-bedroom, two-bathroom, Federation home at 119 Station Street for $1,890,000. Both were on blocks just under 500 square metres.

Bujak said most buyers in the area are professionals who work in the city or are a growing family.

“Anything close to the train station tends to command higher prices. So if you’ve got two properties which are like for like, one’s a five minute walk to the station, but the other is a 25 minute walk to the station, we find that the home closer to the station will yield a better result.”

Bujak noted a migration of buyers from the inner west who are noticing “more value, bigger homes, better blocks of land.”

Selling agent Leanne Nehme from LJ Hooker Bella Vista said a budget of $1.78 million could purchase an unrenovated home, “depending on the school catchment area,” on a 700 square metre block in Baulkham Hills.

“Baulkham Hills in particular, is renowned for its schools, is highly sought after because of its park-like atmosphere, and its high ranking school catchment zone areas,” Nehme said.

She added that it would be possible to buy into the Hills area but it may be on a busy road or a thoroughfare road.

In Hornsby, LJ Hooker’s Eugene Daly said a budget of $1.78 million would purchase a three-bedroom, older-style home in need of renovation. He said the proximity to the train station is important for a lot of buyers.