Australia’s younger generation certainly have it tough when it comes to getting a foot on the property ladder.
And for those with ambitions beyond a one- or two-bedroom apartment, the number of affordable homes appears to be getting smaller.
House prices are rising at levels well above wage growth, meaning those who want to buy their own home with a backyard are being priced out of the market.
The situation is especially dire in Sydney, Brisbane, Adelaide and Perth, where the most aggressive rate hikes in a generation have failed to slow the dynamic property market. Meanwhile, high foreign immigration has caused a growing rental crisis..
Even the most affordable postcodes, such as those in southeast Queensland, are experiencing record growth as Sydneysiders flee north..
A ray of hope for first-time buyers is Melbourne, where house prices have fallen over the past year and land taxes have put off investors.
But what does all this mean for a young person looking to buy? Or an investor? Or a parent looking to help their child climb the real estate ladder?
Here are the numbers: Someone with an average full-time salary of $100,017 can buy a house worth up to $650,110 if they have a 20 per cent deposit of $130,022.
Australia’s younger generation certainly has it tough when it comes to buying a home (pictured, an auction in Sydney)
Banks can only lend someone 5.2 times their salary, meaning the average Australian shopping on their own can borrow $520,088.
But this will mean spending 38 percent of pre-tax wages on monthly mortgage payments, putting these types of borrowers in mortgage stress territory.
If this is a risk you’re willing to take, we’ve researched the suburbs where an ordinary Australian can still buy a suitable home on their own.
But buyers should act quickly before Potential rate cuts in 2025 will lead to even more activity in an already booming market.
Woodridge, just 14 miles south of Logan city center, still has a median affordable home price of $620,294.
Woodridge (Queensland)
- Home prices in Logan have doubled over the past five years.
- Median home price in Woodridge remains affordable: $620,294
- Attractive market for both investors and owner-occupiers
Median house prices in Logan, south of Brisbane, have doubled in the past five years in an area along the M1 motorway linking the Queensland capital to the Gold Coast.
But the suburb of Woodridge, just 22km south of the city centre, still has a median affordable house price of $620,294, well below Greater Brisbane’s $977,575, according to CoreLogic data.
James Kirkland, executive managing director of sales at Little Real Estate, says Logan was one of Australia’s most popular markets because it was attractive to both investors and first-home buyers.
“Based on what we’re seeing, there are no signs of slowing down in that Logan City region,” he tells Daily Mail Australia.
‘That is without a doubt one of the most sought-after areas of Brisbane.
“With the increase of southern investors in that market, we are finding that investors and first-home buyers are fighting it out in the suburbs of Logan.”
San Remo, near Tuggerah Lake and 115km north of Sydney, has a median house price of $692,302, meaning a buyer would have to look for offers below the area’s midpoint.
San Remo, Central Coast, New South Wales
- New South Wales Central Coast has homes for under $700,000
- That’s less than half of Sydney’s $1.5 million median mark.
- An option for those who work in Sydney and still want a backyard
Sydney’s median home price of $1.5 million is well beyond the reach of most buyers unless they earn $226,621.
They would also continue to be in mortgage stress, spending more than a third of their salary servicing a home loan despite being among the top 2.3 percent of earners.
“Buying alone, on a median salary, around that $600,000 — let’s face it, unless you’re buying a very small house, close to town, I don’t think it’s possible,” Kirkland says. .
“If it’s a stand-alone house, you’re going to struggle.”
But there are areas of the Central Coast, an hour’s drive north, where it is still possible to buy a house for just over $600,000.
San Remo, near Tuggerah Lake and 115km north of Sydney, has a median house price of $692,302, meaning a buyer would have to look for a bargain below the suburb’s midpoint.
It is a 20-minute drive from Wyong Train Station, a two-hour journey to Sydney Central Station.
“It would probably be almost quicker to get from the central coast to Sydney than if you were in traffic from the edge of the western suburbs,” Kirkland says.
Meadow Heights, 26km north of Melbourne city centre, has a median house price of $578,590 and prices increased just 0.9 per cent last year.
Meadow Heights, Melbourne
- Melbourne still has suburbs with house prices of $600,000
- They are well below metropolitan Melbourne’s median of $917,616.
- Affordability zones unlike Sydney or even Brisbane
Melbourne’s northern suburbs have postcodes where median house prices are below $600,000 and at levels well below the Victorian capital’s midpoint of $925,762.
Meadow Heights, 16 miles north of downtown, has a median home price of $578,590, and prices only increased 0.9 percent last year.
“It hasn’t had that level of growth and there are still areas where it is affordable to buy a house,” Mr Kirkland tells us.
“In the northwest area there are infrastructures that allow access to the city in a fairly economical way.”
The Victorian government’s flat $975 property tax on investors, to pay for Covid lockdowns, has been blamed for a 2.9 per cent drop in house prices in Melbourne last year.
This has kept house price growth well below the 3.5 per cent rise in wages, giving buyers more options at the lower end of the market.
“This is going to be an interesting time for Melbourne because the city has been very dormant – there is a return to that because it is showing better value and it just hasn’t had that capital growth.”
Adelaide’s northern suburbs have affordable housing, with Salisbury having a median price of $645,477 just 25km north of the city.
Salisbury, Adelaide
- North Adelaide has affordable suburbs for people on average incomes
- House prices in Salisbury have soared 19.5 per cent in just one year
- But the median home price of $645,477 is still relatively affordable.
The South Australian capital has been one of the strongest property markets, with median house prices rising 12.5 per cent in a year to an even more unaffordable $866,327.
But Adelaide’s northern suburbs still have affordable housing: Salisbury has a median price of $645,477 and is just 25 kilometers north of the city.
Prices here have soared 19.5 percent in a year.
“If we’re talking about accessibility to the city, Salisbury is a very short drive away,” says Kirkland.
Unlike Brisbane, Adelaide has a higher owner-occupier ratio, meaning less competition from potential investors.
“The Adelaide market has obviously performed well, but it hasn’t done well before – it’s almost as if this pent-up growth was destined to happen,” Kirkland says.
Perth’s median house price of $847,518 is now out of reach for middle-income people buying on their own, but there are still affordable suburbs like Nollamara, just 9km north of the city, where the average price is $684,473.
Nollamara, Perth
- Perth is Australia’s best performing market
Western Australia’s mining-rich capital has been the country’s top-performing market, with home values rising 18.7 per cent in 2024 as an influx of new residents moved in from other states.
“What’s causing this is a shortage of stock,” Kirkland says.
Perth’s median house price of $847,518 is now out of reach for middle-income people buying on their own, but there are still affordable suburbs like Nollamara, just 9km north of the city, where the average price is $684,473.
State of play
Kirkland says the typical first-time home buyer did it with the help of the “Bank of Mom and Dad.”
“The profile that buys on its own, if it is, for example, a younger buyer, usually does it with one of its parents,” he said.
“There is support from the Bank of Mom and Dad, whether it is a loan insurance guarantee or a deposit.”
Reserve Bank Governor Michele Bullock has ruled out any rate cuts in the next six months, but rate cuts in 2025 will further fuel competition in the affordable end of the housing market as more people look to move away. apartments.
“We will start to attract more first-home buyers to the market,” Kirkland says.
“Once that happens, there will be high-speed activity.”