Australia: Deciding when and where to buy a house is one of the biggest decisions you will ever make, with regards to your finances as well as your livelihood. There are an incredible number of factors to consider, from nearby schools for your children to investment potential.
Luckily, Dr Diaswati Mardiasmo, chief economist at PRD Real Estate, is able provide insights on the real estate climate in four of Australia’s major capital cities, based on extensive research conducted to release their “Affordable and Liveable Property Guide” for the first half of 2020. She shared more on the research process, and key findings below.
What are the top factors that make an area a “hotspot”?
There are many factors that go into research before branding an area a ‘hotspot’, in terms of both affordability and liveability.
• Property transaction & growth perspective: It is important to look for positive capital growth as well as positive price growth.
• Investment perspective: Good rental yields and low vacancy rates, which means that rental properties are snapped up quickly! Ideally there should be lower vacancy rates in the suburb, than in the capital city’s metro area.
• Affordability: This is measured by median prices being lower than the capital city’s metro area.
• Project development: Lots of infrastructure and commercial prospects being planned and invested in that suburb. This helps to sustain economic growth of the area – particularly in the case of infrastructure, shops and offices.
• Live ability: Low crime rate, a lot of amenities within 5 kilometers. This includes schools, hospitals, shops and green spaces like parks.
To be branded as a ‘hotspot’, a suburb must not only have a good price, but also tick all boxes with regard to live ability, investment and infrastructure
Moving on to key findings from the research on capital cities Sydney, Melbourne, Brisbane and Hobart.
Sydney: Surprisingly The Most Affordable Capital City
Although many people think of Sydney as an extremely expensive place to live, in terms of livability aspects it is actually the most affordable capital city. It is easy to find highly live able suburbs that are below the median capital city metro price. In fact, properties can be purchased for under 33% of the Sydney Metro Median House Price. For a comparison, to tick all the same boxes in Hobart, home buyers must pay 5% higher than the Hobart median metro price.
Brisbane: A Haven For First Home Buyers
Research has shown that Brisbane is definitely a hotspot for those buying their first home! 44% of Brisbane suburbs are available for under $500k, which is especially impressive in comparison to other capital cities. None of Sydney and only 5% of Melbourne is available under this price.
If you’re budget is slightly higher at $800k, you can access around 80% of Brisbane when choosing where to buy.
Melbourne: Another Great Spot For First Home Buyers
Melbourne also presents an opportune time for first home buyers, as there has been a 11.1% softening in median house price over the past 15 months. Buyers with a budget of under $800K can now access 46.3% of the market. 18 months ago, buyers with the same budget could only access 23.1% of the market!
Hobart: Buying Your First Home? Better Act Fast
First home buyers in Hobart really need to act fast! In the second half of 2019, 37% of the city could be purchased for under $500k. Now, only 34.6% can be bought at this price! Trends show it is getting increasingly expensive for first home buyers, particularly so when compared to a couple of years ago.
Lastly, how has COVID-19 affected all of this?
Coronavirus might have negatively impacted many of our lives, but it has really helped when it comes to median property prices. At the end of 2019, Sydney and Melbourne’s property markets had recovered and prices were beginning to climb again, but covid-19 has dampened this.
There has been only 1.3% growth in Sydney (very low for this capital city), prices in Melbourne have declined, Brisbane has remained stable and there has only been a slight increase in Hobart. Therefore, capital cities are currently more affordable for buyers, due to the current pandemic.
By Monisha Iswaran