Australia’s slowing market conditions have seen falling property prices in the nation’s two largest capital city markets and with that perhaps an opportunity for home buyers looking to “move on up”.
Property valuers Herron Todd White provide a breakdown of how to buy reasonably-priced property in the best suburbs in the valuer's latest Month in Review report.
“These suburbs aren’t necessarily the most expensive suburbs in their parts of the city but are well regarded and provide some decent beer budget or entry-level opportunities,” the report says.
Inner Sydney: Upscale Paddington is a well regarded suburb featuring preserved Victorian architecture, that is in demand and low on supply.
“Close proximity to quality schools, the CBD and Bondi Junction only broadens the appeal of this suburb.”
Unfortunately, everyone wants a piece of the action in these desirable suburbs, and the price-tag for inner urban locations reflect this.
The median house price in Paddington for 2018 was $2.35 million, and $920,000 for units according to realestate.com.au.
Looking at entry level options, Herron Todd White says units provide the best option.
The report says compromises must be made in order to purchase at the lower end of blue-chip suburbs, with dwellings such as units or attached-dwellings in original condition, and smaller in size.
An original 1970s, one-bedroom, one-bathroom unit sold in January for $617,500, and a two-bedroom, one-bathroom unit sold for $880,000 in February this year.
“Are the compromises worth it? Absolutely, if you want to be in the heart of the action. You’re buying into a premium and highly liveable suburb for well under a million dollars.”
The properties in this area which are targeted by investors tend to be on smaller parcels of land and often forgo parking.
“The dwelling market within the inner city is largely dominated by owner-occupiers.”
Northern Sydney: Northbridge is an established suburb, with a mix of housing styles on Sydney’s Lower North Shore.
Located 6.5 kilometers from Sydney CBD, this suburb’s median house price sits around $3.18 million, not the typical affordable price range.
“It must be noted however that this median price is down from $3.49 million in 2017, although still not quite in the affordable category for the majority.
HTW suggests locating entry-level properties in this well-regarded suburb, for example, a house on Strathallan Avenue sold for $1.7 million in January this year.
HTW says at almost half of the median price in Northbridge, “surely must have long-term prospects”.
The most prestigious properties of the suburb are positioned on waterfront land and orientated to take in Middle Harbour views.
Western Sydney: In north-western Sydney, Castle Hill is seen as a desirable location for many locals.
The main draw-cards are high-quality schools, larger blocks, quiet leafy streets and close proximity to a major shopping centre.
This suburb provides a variety of real estate, but houses usually begin from $1.2 million for entry-level dwellings and range up to between $3 million and $4 million.
“The absolute entry level for dwellings in Castle Hill is the sub-$1 million market. Any dwellings under this mark have a number of less desirable features, but for the savvy purchaser, present a foothold in the market.”
“Long term, land in Sydney will become more valuable and having 700sq metres in Castle Hill should prove to be a smart decision,” the report notes.
Dwellings in Castle Hill have risen 52 per cent over the past five years.
“This came off the back of Sydney’s huge price boom. Whilst the median has dropped in the past 12 months, Castle Hill in the long term is seen as a wise move given the solid fundamentals and major draw cards that underpin the area.”
East: Arguably three of the best suburbs in Melbourne’s East are Hawthorn, Kew and Camberwell, according to Herron Todd White.
“These eastern suburbs are the exemplars of location, location, location,” the review notes.
“These suburbs are not extremely affordable, however, they depict that location really is everything and the benchmark for successful property buying.”
PropertyData shows Hawthorn’s median house price is $2.21 million, while the median unit price has dropped to $566,000.
Kew and Camberwell have recorded a decline in dwelling values recently, Kew’s median house price sits at $1.975 million and Camberwells’s around $1.88 million.
“Land sizes in Kew are on average larger than those in Hawthorn, therefore $2 million will offer an un-renovated detached 1950s or 1960s dwelling.”
The three suburbs consist of a blend of period homes on tree-lined streets. Think leafy parks, prestigious schools and shopping strips comprising restaurants, bars and cafes. The cosmopolitan lifestyle.
“Historic eastern suburbs have a purpose for long-term living and investment.”
“Hawthorn, Kew and Camberwell’s blend of heritage homes… ensure that owner-occupiers and investors are provided with the stability of purchasing in great locations.”
North: Slowing market conditions have created the opportunity to buy in desirable inner northern locations Brunswick, Northcote and Carlton.
“These locations are certainly the best selections of the northern suburbs,” the report notes.
“The hunt to find a suitable property in these locations for a long term stay continues to be an issue for many people wanting to make the move, because as we know, great location comes with a big price tag.”
HTW says the most affordable available offering in these locations will be a two-bedroom apartment ranging from $400,000 to $500,000 in Brunswick and $700,000 to $775,000 in Carlton, with similar price-points in Northcote.
“However the lowest price you will pay for a detached dwelling in the area is $1.1 million to $1.3 million.”
The driver for property in these areas is location.
“Purchasers wanting to live closer to the CBD within the northern suburbs but who have a price range of $400,000 to $800,000 must be willing to give up their aspirations for a spacious dwelling with large internal living areas, a high number of bedrooms and land area.”
Geelong: Geelong, Drumcondra and Rippleside are pegged as the standout premium suburbs.
“Tightly held, these suburbs offer exceptional bayside living in a blend of period and modern style dwellings.”
Rippleside has seen a jump in the value of dwelling prices of almost 19 per cent over the past three years thanks to the Balmoral Quay waterfront development.
The median house prices for Drumcondra sits around $885,000, Geelong $745,000 and Rippleside $735,000, according to Realestate.com.
A $40 million redevelopment of the Royal Geelong Yacht Club Safe Harbour has been proposed, which HTW thinks could boost property values.
“For those looking to enter the market in these locations, patience will be the key as the area is tightly held.
“Good opportunities still present themselves, however, buyers will have to compromise on location, size and quality of dwellings. Furthermore, they may need to roll up their sleeves and get their hands dirty undertaking cosmetic renovation and updates to bring the dwelling up to spec.”
