The most affordable suburbs within 10km of Sydney’s CBD

House hunters hoping for an inner Sydney home on a budget will find the most affordable properties in a string of inner west and inner south suburbs.

But they will still need relatively deep pockets, and could halve their outlay by looking to an inner-suburban unit instead.

The inner west and south offer some of the cheapest house prices in inner Sydney.Credit: Steven Siewert

Even in Tempe, the most affordable suburb within 10 kilometres of the Sydney CBD, the median house price was $1.55 million last year, on Domain data, just short of Sydney’s record median of almost $1.6 million. It was followed by Arncliffe at about $1,576,000, St Peters at $1.6 million and Botany at $1,625,000.

It comes as the NSW Productivity Commissioner this week warned of the need for more higher-density development to avoid the risk of Sydney becoming a city with no grandchildren, given an exodus of people aged 30 to 40 amid declining housing affordability.

Within the inner suburbs, apartment buyers could already purchase the median unit in Eastlakes for $645,000, or look to Canterbury ($669,000), Hillsdale ($680,000), Rushcutters Bay ($700,000), which has more studios and one-bedroom units, and Arncliffe ($710,000). Each were priced below the Sydney unit median of $796,000. Only suburbs with a minimum of 50 sales recorded a median.

This contrasts with some of the prices commanded elsewhere in inner Sydney, such as Bronte ($5.8 million), Northbridge ($4.65 million), Randwick ($3.28 million), Chatswood ($3.18 million) and Glebe ($2.73 million).

Domain chief of research and economics Dr Nicola Powell said Sydney had a strong price rebound last year, as buyer demand outstripped the supply of homes for sale.

“The focus is back on cities, our population growth [from new arrivals] is going into the cities and the spill-over from the competitive rental market is probably pulling forward some [first home buyer’s] decision to purchase,” Powell said.

It was challenging to buy in inner Sydney for less than the citywide median, Powell said, given the premium paid for land typically climbed the closer it was to the CBD. Apartments offered a much lower entry price though, as the most affordable were less than half the price of the cheapest houses.

Powell said more medium and high density housing in the right locations was key to utilising land more efficiently and driving greater affordability.

“That is why, particularly in Sydney, you are seeing much more conversation around … changes to planning reforms,” Powell said.

”It’s important that we keep the character of suburbs, but we need to focus on developing our cities to be future proofed, rather than developing cities based on election cycles.“

NSW Productivity Commissioner Peter Achterstraat’s report this week noted lower income households were having to move further from city centres, away from jobs and public amenities, and made up less than a fifth of those living within 10 kilometres of the CBD in 2021.

St George chief economist Besa Deda said declining affordability was contributing to widening intergenerational wealth inequality.

Sydney’s median house price is almost $1.6 million.Credit: Steven Siewert

“It is harder for young people to get into the market and ... they are having to increasingly turn to the bank of mum and dad for help, but there are people who don’t have access to that,” she said.

Deda expects prices to rise further this year, but at a slower rate because of affordability constraints, an increase in homes for sale and a gradually rising unemployment rate.

“But there’s still a housing shortage ... so that will support price growth, but it’s tapering off,” she said, adding rate cut hopes could be lifting buyer sentiment.

In suburbs like Arncliffe, 9.7 kilometres from the CBD, there has been increasing interest from buyers priced out of the inner west, eastern suburbs and even north shore, said real estate agent Sam Abbas, of Stone Real Estate Rockdale.

“There are a lot of buyers surprisingly coming from other areas in the last 18 to 24 months,” Abbas said. “[Mostly] young families and couples that see they can get more bang for their buck … but still get proximity to the city and all the amenities.”

His clients, Arncliffe sellers James and Ann Keating, said location was a key reason why they chose the suburb when they retired.

“We wanted to downsize and move closer to the city,” Mrs Keating said, noting they first looked to smaller houses and duplexes before coming across their three-bedroom penthouse apartment.

James and Ann Keating are selling their apartment in Arncliffe, one of the most affordable suburbs within 10km of the CBD.Credit: Wolter Peeters

“When we saw the views from this place that was it,” Mr Keating added.

The apartment has been a Sydney base between lots of travel in recent years. But with fewer trips on the horizon, they’ve decided to move again, but hope to stay in the area.

“We’ve got used to the convenience of everything, we’ve got two [train] stations nearby, Botany Bay and Brighton are not far, and so we’re close to the beach, and of course, the airport is nearby too.”