Flight to the ’burbs opens up inner-city bargains

There’s never been a better time to buy a city or suburban unit, as Covid drives people out | BEST SPOTS TO BUY

Millennials Nicola Baisley and her partner Taren Smith have left their Lane Cove apartment in Sydney for a four-bedroom house in the suburbs. Picture: Ryan Osland

Celebrity real estate agent John McGrath is urging owner-occupiers and savvy investors to return to capital city apartments, saying there has never been a better time to buy a city or suburban unit, given that these markets have been so substantially rattled by the Covid-19 pandemic.

Rent drops and rising vacancies in some inner-city suburbs – along with reductions in median apartment prices by as much as 9 per cent on a year ago – are ­paving the way for savvy first-movers to enter the market, as many city apartment dwellers flee to the cheaper suburbs or regions.

In a surprise move, Mr McGrath has named Homebush – a suburb once known for its abattoirs and, later, Olympic sporting infrastructure – in Sydney’s west as one of his key picks for buying in 2022 given its proximity to the new WestConnex motorway.

Also in Sydney, Malabar and Little Bay are among the agent’s top picks for ocean living, given that the eastern beaches from ­Maroubra to Bondi are “unaffordable for most mere mortals”.

“There are only a few city beach suburbs left that represent relatively affordable value for most Sydneysiders,” Mr McGrath said. “The peninsula from Malabar to Little Bay is about to become one of the most in-demand locations in the country.”

In Melbourne, the once down-at-heel Pascoe Vale, 10km from the centre, is popular with Mr McGrath because it has stayed below the million-dollar threshold, unlike its near neighbours Coburg and Pascoe Vale South.

On the Gold Coast, Mr McGrath plumps for Bonogin, saying this newcomer to the Gold Coast’s million-dollar median club was once the poor cousin of the exclusive acreage suburbs surrounding it, and families should choose it for its dirt trails and wide expanses.

The McGrath Report, released on Saturday, notes that affordability has made the great Australian dream of home ownership a challenge for millennials, with many increasingly moving out of the city centres for cheaper houses in the suburbs and further afield.

 

Taren Smith, a carpenter, and his partner Nicola Baisley, a property manager, wanted a larger, comfortable home for their future family. After renting in Lane Cove for seven years, they could not ­afford Sydney’s inner suburbs so they bought a renovated house with pool in Kings Langley, 37km from the Sydney CBD at auction for $1.54m through McGrath.

“We wanted a home for our ­future family, we wanted it to be larger and an increase in rooms and we couldn’t afford anywhere closer to the CBD,” Mr Smith says. “It seemed to be the closest property that we could afford for what we wanted. It has four bedrooms, and is about a 40-minute drive.

“At the start, we thought the travel time would be tough, but I am already travelling to the northern beaches for work, which is 30 to 40 minutes each way. We want to get out of the hustle and bustle, where it is more relaxed, and we wanted our dream house.”

In other moves by millennials, Mr McGrath notes hospitality and tourism workers, for example, are returning from city apartments to their parents’ suburban homes after losing their jobs, while the immigrant and overseas student tenant market which typically propped up city apartments has all but dried up.

“This makes inner-city apartments a once-in-a-lifetime buy,” he said, adding that apartment prices in Sydney’s lower north shore had dropped nearly 9 per cent on a year ago.

In central Melbourne’s Boroondara, unit prices are down 2 per cent on a year ago, while in Brisbane’s northeast, units in Gaythorne are down more than 8 per cent to $375,000.

“Businesses will come back to the CBD, night-life will resume and people will once again want to live in the inner city, just as they are now in the reopened US, UK and Europe,” Mr McGrath said.

“Owner-occupiers and investors have a unique, time-limited opportunity to use the advantage that a closed border brings to buy well in FY 22, before life returns to normal and we see an anticipated uplift in both rental and capital values across our inner cities.”