Young people have long given up on being able to afford a house with a backyard on one income, but there are cities where the Australian dream is still alive and investors can find great value.
Earning six figures no longer guarantees climbing the property ladder, even in regional areas where $100,000 is now the minimum required for a home loan.
And you can forget about buying a house in a capital city on that salary, the median price of which is now well above the million-dollar mark.
However, there are remote areas of Western Australia, Queensland and South Australia with prices not seen in Sydney and Melbourne since the early 1990s.
Some of these cities with a median home price under $200,000 are just a two-hour drive from a major capital.
There are also run-down homes available for as little as $8,000, less than the price of a used car.
The typical home is so affordable that even a part-time worker earning less than the full-time minimum wage has a chance.
All they need is a 20 percent deposit of $40,000 and the ability to set aside $1,000 a month for mortgage payments, which is easily possible on the minimum full-time salary of $47,622.
Australia’s young people struggle to get a house in any capital city or coastal town (pictured, Gold Coast schoolchildren)
Wongan Hills, just 174 kilometers or two hours’ drive northeast of Perth, has a median house price of $202,000, even after a 15.2 per cent annual increase.
Wongan Hills, just 174 kilometers or two hours’ drive northeast of Perth, has a median house price of $202,000, even after a 15.2 per cent annual rise in an area with wheat, sheep and pig farming. which houses less than 900 people.
Peter Gavalas, director of Western Australia-based buyers’ agent Resolve Property Solutions, says these ultra-cheap cities typically have just one industry: farming or mining.
“In terms of the amount of work, I suspect that other than farming there probably isn’t much else to do there,” he tells me.
“There could be good value if there is demand, if there are people who want to buy or rent.”
Kambalda West, 625 kilometers east of Perth, has a very affordable median house price of $183,027 and is just 20 kilometers from the St Ives gold mine.
Property values here rose 8.9 per cent in the year to October, CoreLogic data shows.
Despite that, it is still possible for someone with a 20 per cent deposit of $36,605 to buy a home on a very low income of $28,158, which is well below the full-time minimum wage of $47,622.
Last year, in nearby Kambalda East, across the Goldfields Highway, a three-bedroom house sold for just $8,000.
Kambalda West, 625km east of Perth, has a very affordable median house price of $183,027 and is just 20km from the St Ives Gold Mine.
Last year, in nearby Kambalda East, across the Goldfields Highway, a three-bedroom house sold for just $8,000.
Western Australia has several very affordable small towns, and Kellerberrin, 202 kilometers east of Perth, has a median price of just $195,000.
A lot sold there last year for just $33,000.
Gavalas said very cheap cities often lack population growth, and the number of residents in some of these areas is even declining, according to census data.
“You need that population growth or demand in that area to get prices,” he says.
‘You may get a good return in terms of rental, but you may not get capital growth. “There is not enough demand in the area.”
Cooper Pedy, an opal mining town 526 kilometers northwest of Adelaide, has bargains under $100,000.
In November, a three-bedroom house sold for just $65,000.
Cooper Pedy, an opal mining town 526km northwest of Adelaide, has bargains under $100,000
Tara, a four-hour drive 300 kilometers west of Brisbane, has a median house price of $193,893, even after a 12.7 per cent annual rise.
Gavalas explains that there is risk in investing in mining towns, where the fortunes of the economy and employment are tied to raw material prices.
“It’s probably just a gimmick that relies on an industry to keep going; there certainly won’t be people moving there for lifestyle reasons,” he says.
‘It is necessary that there be jobs that generate interest.
‘You have to look at how many properties are actually sold in that area per year and how many are on the market.
“I suspect they wouldn’t sell many properties.”
Southern and central Queensland also have affordability zones.
Tara, a four-hour drive 300 kilometers west of Brisbane, has a median house price of $193,893, even after a 12.7 per cent annual rise.
Central Queensland also has some very affordable towns in the Rockhampton hinterland, with Dysart having a median price of $217,023 – and that’s after a 12.4 per cent annual increase.
Western Australia has several very affordable small towns, such as Kellerberrin, 202km east of Perth, which has an average price of just $195,000.
Blackwater, east of Emerald, has seen an 18 percent increase, but prices remain affordable at $229,603.
Investors are advised to look for larger regional centers with at least three industries and a population of at least 20,000 people to achieve longer-term capital growth.
“Something that has more than one industry: I see a port, a railway line, a highway, a little bit of infrastructure,” says Gavalas.
Geraldton, 429 kilometers north of Perth, with a population of 38,595, has a median affordable house price of $401,676 and is home to a port that exports iron ore and lobsters.
Prices have risen more than 20 per cent over the past year and Western Australia is by far the best performing state in the country.