Property prices decline in inner city, eastern suburbs - is it enough for first home buyers?
With Sydney’s property boom beginning to slow at last, the inner city and eastern suburbs homeowners have been hit hardest by backsliding prices, with declines of a massive 6% over the September quarter, according to Domain’s latest State of the Market report. But hopeful first home buyers shouldn't get too excited just yet.
Overall, Sydney’s median house price fell by 1.9% in the three months to September, bringing the median price tag for a Sydney home to $1,167,516 - one of the biggest declines in markets around the country.
The price of inner city and Eastern suburbs properties in particular tumbled by 6%, but it may be too soon for home buyers to pin their hopes on snapping up a house in Bondi. Even with the massive decrease in prices, the median house price remains at a cool $2.17 million.
“The Sydney property market is definitely cooling off. But the thing with areas like the eastern suburbs or inner city is that prices were so incredibly high six months ago, that it will take a while before they drop back to anything less than $2 million,” said Mozo property expert, Steve Jovcevski.
In fact, despite the backslide, the Domain report said Sydney “remains the highest-priced capital city in Australia” ahead of other cities which posted increasing prices over the quarter.
Melbourne, which had the second highest median house price at $880,902, saw house prices increase by 1.3%, while apartments shot up 3.4%. Other cities that saw big growth, but where prices remained lower, include Canberra (4.3% increase in house prices $723,980) and Hobart (4.4% increase in house prices to median of $409,592.)
With house prices in desirable Sydney suburbs still out of reach for many ordinary Aussies, the trend of “rentvesting” has picked up steam. The strategy involves renting in an area where you want to live, while buying a property in a more affordable area.
Jovcevski recently identified 7 of the hottest suburbs for rentvestors to buy into, and unsurprisingly, the inner city and eastern suburbs were not on the list. Liverpool was the top pick for NSW, with a median unit price of $448,000. Mozo research showed prospective homebuyers in the area would need to cough up $89,600 for a 20% deposit and make monthly repayments of $1,896, assuming they snag a 4.87% on a 30 year home loan.
A unit on the lower north shore, where apartment prices dropped by 6.7% over the quarter, on the other hand, will set buyers back $900,000. That’s a 20% deposit of $180,000 and according to our home loan repayment calculator, monthly repayments of $3,808 given the same conditions as above.
“Rentvesting is a chance for young buyers to get their hands on a property sooner, without giving up the chance to live in an area close to work, bars, the beach, or other amenities,” said Jovceski.
Ready to jump into the property market? Head over to our home loan comparison table to find a mortgage that will get you into the market without breaking the bank.