Many have a median price below $600,000
A new report has suggested that it is possible to buy in desirable regional and capital city markets with a smaller budget.
Canstar’s Bright Stars report, powered by Hotspotting, revealed that as many as 90 suburbs (or 82%) out of the 110 top locations in the report have a median property price below $600,000 and 39 (or 35%) are under $400,000.
“After 12 interest rate hikes, and possibly more to come, the only way for some homebuyers to buy property and still be able to service a mortgage is to quite simply borrow less,” said Effie Zahos (pictured above), Canstar’s editor-at-large and money expert.
“Impossible you may say, especially as housing values appear to be rebounding, however, there are plenty of suburbs and towns around the country with an affordable edge and the purpose of this latest report is to help homebuyers and investors find them.”
To see the list of the 110 ‘Bright Star’ towns and suburbs visit www.canstar.com.au/bright-stars-report.
Securing these affordable properties with a 10% deposit plus lenders mortgage insurance will require an initial outlay of as low as $26,540 in the regional locations and $34,526 in the capital city suburbs.
This includes stamp duty, mortgage registration, and transfer fees and assumes the buyer is eligible for a first-home buyer concession on stamp duty.
For buyers that don’t qualify for the stamp duty concession, the figures are only slightly higher at $26,796 and $43,814, respectively.
Zahos said the affordable price points of the Bright Star suburbs make it a little bit easier for homeowner hopefuls to service a loan, especially if one is buying with someone else.
“Repayments as a percentage of before-tax income for the property locations identified in this report range from 8% to 30% for a dual-income couple borrowing 80% of the property value and from 9% to 35% for a couple borrowing 90%,” she said. “This sees the majority of locations for a dual-income couple currently below the 30% before-tax income threshold that usually considers buyers to be in mortgage stress.”
For those buying solo, the repayments will account for a bigger chunk of their income.
“However, the mortgage repayments are actually cheaper than the monthly median rent in 40 of the suburbs on the list, assuming you borrow 80% of the median property value, and 18 if you borrow 90%,” Zahos said.
Terry Ryder, Hotspotting property expert and co-producer of the Bright Stars Report, said now is a time of change – and opportunity – in Australian property.
“The evidence of rising prices – at a time of high inflation, rising interest rates and other metrics, notably record-low vacancy rates, and rising rentals – presents an opportunity for prospective buyers early in the property life cycle,” Ryder said. “There is a possibility of buying well ahead of bigger price growth, at a time when many remain on the sidelines awaiting news of a boom.”
He noted that there has been an improvement in affordability from an entry price perspective this year, following a year when prices fell in many locations and price growth was only moderate in others.
“In the biggest cities, buying affordable houses means heading to the outer-ring areas,” Ryder said. “But there’s an alternative now being seized by many – buying apartments in better locations for prices similar to houses on the city fringes. Well-located apartments can be both a more attainable option and an appealing lifestyle choice.”
The Bright Stars Report also ranked 14 jurisdictions nationally, comprising eight capital cities and six regional states and territories, from most to least affordable, based on two key metrics – initial outlay and repayments as a percentage of income.
Regional Western Australia came out on top as the most affordable location to buy property in Australia. This was followed by Regional South Australia. Two capital cities also made it to the affordability leaderboard – Perth in third place and Darwin in sixth.
On the other side of the affordability spectrum was Canberra, Melbourne, and Sydney. At $912,981 the price cap for Sydney is by far the highest. It is three times more than Regional SA’s price cap of $275,387 (which is the lowest on the list) and double that of many others, the report found.
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