Government aiming to fix housing deposit problemBuyers to save more than $500 a month to overcome ‘deposit hurdle’Developers try to lure first-home buyers ahead of Budget
There are now only four Sydney suburbs where the median house price is below $500,000, new data shows. And they’re all more than 45 kilometres west of the CBD.
Five years ago, there were more than 150 suburbs out of 467 in Sydney that could make this claim. This included areas like Auburn, South Granville, Westmead and Campbelltown.
Now, the only areas with median house prices under half a million dollars are the City of Blacktown’s Willmot, Tregear, Lethbridge Park and Blackett.
This statistic is daunting for entry-level buyers and left them few options, said Joshua Manzanera, 27, who moved to the Central Coast where he rents with boarders to save for a first home.
Working as an IT consultant in Sydney CBD on a “decent” wage, he has managed to save just under $10,000 in about 12 months but has had to make a lot of sacrifices.
And when he thinks about being able to buy soon, simply, “it’s not going to happen”.
“This generation is struggling and crying out for help ??? and I’m one of them,” Mr Manzanera said.
But he doesn’t want access to his superannuation or even negative gearing cuts. Instead, he just thinks the government should be providing more incentives for first-home buyers to save.
Without any assistance, his options and the options of other first-home buyers are limited to the shrinking pool of low-priced suburbs.
And even for those willing to buy in these areas, a 10 per cent deposit and costs requires “at least $75,000”, First Home Buyers Australia co-founder Daniel Cohen said.
Despite this, the advice given to young people continues to be “go west, it’s affordable out there,” he said.
And prices are unlikely to remain this low in these areas for long, Raine & Horne St Marys sales agent Peter Diamantidis said.
“We are finding more owner occupiers [and] first-home buyers now moving into these areas compared to 12 months ago which is now getting close on exceeding $500,000,” he said.
He recently broke a suburb record in Sydney’s cheapest suburb, Willmot, with a $592,000 sale at the end of 2016. The same home last sold for $385,000 in 2014.
A five-bedroom house at 9 Wallis Place in Willmot sold for $592,000 in November 2016 – a suburb record that was smashed again three months later. Photo: Raine & Horne St Marys
Willmot’s record was broken again in February when a near-new five-bedroom house sold for $700,000.
In 2012, Right Property Group buyers’ agent Victor Kumar was buying properties in the area for investors in the $180,000 to $300,000 range with little competition.
At the time, many people saw the area as a “no go zone … it had very bad stigma”, Mr Kumar said.
But since prices have increased, it’s unattractive even to Sydney’s investor class; who are looking for better rental yields and lower prices in other states.
“[$500,000] would get you almost two houses in certain parts of Brisbane … several apartments in South Australia or a house very close to the city.”
Now, most of the buyers are owner occupiers due to the comparatively affordable price point next to a Sydney-wide $1.15 million median.
They’re increasingly making the compromise to live in far-flung poorly connected western Sydney suburbs, typically known for a historically high proportion of housing commission, Starr Partners chief executive Doug Driscoll said.
The alternative to this is moving to the Central Coast and South Coast.
“Considering the average commute in Sydney is currently 90 minutes, people will be prepared to spend a bit more time in the car or on the train,” Mr Driscoll said.
Some Sydney residents would choose to rent or take on a bigger mortgage, both of which can be “financially and emotionally stressful”, University of Sydney senior lecturer Dallas Rogers said.
“This area is western Sydney is the last [affordable] enclave and it won’t be there for very long. People are disheartened and they don’t know how they’ll get into the market.”
Domain Group chief economist Andrew Wilson said it was a “seismic change” that would put pressure on the rental market.
“It’s little wonder first-home buyers are deader than the dodo.”