Young home buyers could be better off investing in smaller Australian capitals, like…Adelaide?

By Evlin DuBose · · 3 min read
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Sometimes you’ve got everything in place: a pre-approved home loan, an agent, and a dream. But given Australia’s ridiculously competitive property prices, it’s easy to feel like young first home buyers have limited opportunities.

New Corelogic data suggests sales are slowing down overall nationwide, despite sky-high prices and red-hot auction lots. However, this may not be the case in Australia’s smaller capitals. So unless you’re in a strong position to accrue lots of debt by investing in Sydney, Melbourne, or Canberra property, young buyers with smaller loans/debt limits may be better served farther afield.

Brisbane and Adelaide have shown small but compelling upward ticks in sales and supply. So even if you’re just looking to grow your equity, these rising capitals could represent a more realistic investment opportunity for younger buyers. 

Let’s compare and see how far your home loan can take you in Australia’s smaller cities.

Property in smaller Australian capitals could give you bigger bang for your buck

There are a few ways to gain a unique edge in the Australian property market, like buying  off-market, but these tactics can have hidden expenses on top of your home loan. So how can price conscious buyers maximise their opportunities? 

According to the current ABS residential property price index, the prices in Sydney and Melbourne have skyrocketed due to intense demand. While the smaller capitals have also seen spikes, they had less dramatic final results.

Residential mean dwelling price Australian states and territories bar graph, December 2021

From here, we can pick out the relatively cheaper states as potential investment avenues.

AreaQLDTASSAWANT
Mean dwelling price$749,100$649,200$614,300$614,300$489,000

These low prices have driven a bit of a property boom in the smaller state capitals, especially Adelaide and Brisbane. 

In a comment to the Australian Financial Review, local Adelaide agent and auctioneer Mark Sheppard remarked that while population growth is certainly fuelling Adelaide’s market, prices haven’t risen to stellar heights because they came from such a low point. 

According to Corelogic’s hedonic home value index, the median dwelling price in Adelaide is $593,883. This may still seem out of reach for many, but compared to Sydney’s deeply distressing $1,116,219, it’s much more doable for the average Australian mortgage price (about $600,000).

Even outside Adelaide’s CBD, a budget of $600,000 is ample for a wide variety of family homes, close to nature with options for transport and schools. Recent REA data revealed 138 Adelaide metropolitan suburbs with houses below the current median house price, making them an absolute magnet for keen buyers.

Price comparison: how much home loans cost in different Australian capital cities

For a clearer picture of how much a home loan could cost in different Australian capital cities, let’s make a comparison table. 

First, we’ll standardise the terms of our theoretical home loans. According to Mozo’s database, the median variable interest rate is 2.71% p.a. We can also take a typical term of 25 years and say we’re borrowing the exact same amount as the median dwelling price (according to Corelogic). 

If we plug all this data into Mozo’s mortgage repayment calculator, we get the following results:

CityMedian dwelling priceMonthly repaymentTotal interest repayable
Sydney$1,116,219
$5,126
$421,705
Canberra$909,379$4,176$343,561
Melbourne$799,756$3,673$302,146
Hobart$724,366$3,327$273,664
Brisbane$722,433$3,318$272,933
Adelaide$593,883$2,728$224,368
Perth
$535,335$2,459$202,248
Darwin$495,573$2,276$187,226

This illustrates the impact prices could have on home loan costs over time. While this is only a rough estimate using average parameters (after all, variable interest rates are variable), it indicates which capitals could potentially give you the biggest bang for your buck.

Research is a vital part of home-buying prep, so be sure to head over to our home loans guides section for more information. You can also compare home loans below.

Home loan comparisons on Mozo

Mozo may receive payment if you click the products below. We don’t compare the entire market, but you can compare more home loans here.
Last updated 27 July 2024 Important disclosures and comparison rate warning*

Promoted

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.

  • Neat Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <60%
    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.11 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

    Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.

  • Special Real Deal Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <80%
    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.13 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

    Refinancers or first home buyers pay no monthly or annual fees. Up to $3,000 cashback when you complete your home loan application online. $2,000 cashback on loans ≥$250K; or $3,000 cashback on loans ≥$500K. LVR ≤80%. T&Cs and credit criteria apply.

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • OMG Home Loan

    • Owner Occupier
    • Principal & Interest
    • <60% LVR
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    6.02 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    BCU Bank’s OMG owner occupied home loan offers a variety of great low rates depending on your deposit. Save with no ongoing annual fees. Access your extra payments when you need to through the redraw facility. Pre-approval valid for 3 months.

  • Express Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <90%
    Interest rate
    6.01 % p.a.
    Variable
    Comparison rate
    6.14 % p.a.
    Initial monthly repayment
    $3,001
    Go to site

    Get online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.

  • Neat Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <60%
    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.11 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

    Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.

  • Special Real Deal Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <80%
    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.13 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

    Refinancers or first home buyers pay no monthly or annual fees. Up to $3,000 cashback when you complete your home loan application online. $2,000 cashback on loans ≥$250K; or $3,000 cashback on loans ≥$500K. LVR ≤80%. T&Cs and credit criteria apply.

  • Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.

  • Flex Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <60%
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.38 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Competitive variable rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.

  • Offset Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.39 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.

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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.

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