It often seems like another day, another announcement on ballooning Sydney house prices. The city has consistently offered fodder for concerned property market observers, who say the New South Wales capital is headed for a housing bubble – and it’s only a matter of time before the good times burst.
For those investigating their home loan options, this discussion can seem a bit disheartening. While it might seem like the Harbour City is rapidly sailing out of reach for the everyday buyer, research from CoreLogic RP Data has unveiled the most affordable options in central areas for those on the house hunt – and what type of home could work for you.
Is Sydney becoming more unaffordable?
CoreLogic compiled a list of the top five most affordable suburbs within 10 kilometres of capital city CBD’s with interesting results. Only two of the top five in Sydney were below the $900,000 mark – when compared to the the equivalent areas in other locations, it’s clear just how high in the demand central areas are. The southern suburb of Turella was listed as the most affordable within the 10km radius for houses, with a median price of $839,676, followed by Sydenham, St Peters, Tempe and Waterloo.
These are unsurprising results given a recent report by Moody’s. Its Affordability Measure found that low interest rates have helped homeowners with repaying the mortgage, but surging Sydney prices are at risk of undermining these benefits. SQM Research has the median price for a house in Sydney rising 10.5 per cent over the year to April 28. As a result, households in the Harbour City spend an average of 35.1 per cent of their income on home loan repayments as of March 31 2015, while the overall national average was just 27 per cent, according to the Moody’s report.
“Affordability also deteriorated in Melbourne, but improved in Perth and Brisbane, while it was steady in Adelaide,” said Moody’s Analyst Natsumi Matsuda in an April 27 release.
Or is it just houses?
However, it’s important not to take these results completely at face value. There are some clear differences between property types in the city. The Moody’s index suggested that falling affordability was a lot more pronounced for houses rather than units in the hotspots of Sydney and Melbourne – in fact, across the country, the measure for unit affordability improved.
This was also reflected in the CoreLogic findings. Eastlakes took out top spot for units with a median value of $484,487 and each of the other four suburbs sat below $600,000. In fact, the median price for a unit in Sydney sat just over this mark as of the week ending April 28, according to SQM Research.
It’s a sound reminder to do your research before making the leap to home ownership. While a certain area might appeal to you, your outlook should be realistic and based on what you can afford to borrow. Luckily, our team of home loan professionals at Police Bank are on hand to help.