For would-be buyers priced out of their dream suburbs, a housing market slowdown is a second chance to buy back in.
Home values in Australia’s two major property markets have fallen since the end of 2017, with the median price of a house in Sydney down 10.9 per cent year-on-year to $902,786, and 10.6 per cent to $740,425 in Melbourne, according to CoreLogic.
At the same time, the number of homes advertised for sale has risen dramatically, with listings up 34 per cent in Melbourne compared to the same time last year, and 24 per cent in Sydney.
For buyers that means one crucial thing: negotiating power.
“Heightened levels of homes available for purchase inevitably pushes more power back to the buyer,” CoreLogic head of research Tim Lawless said.
“Buyers are now in a position where they can negotiate harder, take their time in making a purchase decision and be selective in finding a home that is right for their budget and lifestyle.”
In both cities, sought-after inner-city suburbs have seen median house price falls of more than 10 per cent over the past year.
In Flemington, five kilometres from Melbourne’s CBD, the median house price has plunged from $1.17 million in mid-2017 to $896,000 at the end of 2018, according to the Real Estate Institute of Victoria.
In Melbourne’s hipster heartland of Brunswick, the median house price peaked at $1.28 million in the third quarter of 2017, and has since fallen to $1.025 million, while houses in Chadstone plummeted from a median of $1.23 million in mid-2017 to $916,000 at the end of 2018.
Apartment hunters in Sydney can also take advantage of dramatic price plunges in Newtown, where the median apartment price fell by 19.88 per cent in 2018 to $665,000, and Paddington, where units have fallen by 20.37 per cent for a median value of $856,000, according to CoreLogic.
In Roselands, 16 kilometres from Sydney’s CBD, the median house price fell by 14.08 per cent to $973,000 over the past year, while Redfern’s median house price plummeted by 18 per cent to $1.4 million.
‘The Steven Bradbury of property’
As the major markets cool, Australia’s most affordable city is garnering more attention.
The Adelaide housing market is “a bit like the Steven Bradbury of property”, The Freedom Formula author Bushy Martin said.
“It’s always been a consistent performer that doesn’t enjoy the highs and lows that other states do, but just quietly chugs along,” the property investment strategist said.
Now, the city’s median house price has jumped, rising 2.13 per cent over the December quarter to a record high of $480,000, and investors are taking notice.
“Suddenly Adelaide is looking good compared to other locations, but it’s always been an affordable place to buy and build a home,” Mr Martin said.
“There have been massive corrections in Sydney and Melbourne, whereas prices in Adelaide are steadily increasing.”
First home buyers should look to “up and coming areas” such as Mount Barker, where the median house price is $410,000 according to the Real Estate Institute of South Australia.
“You can get a really good quality four-bedroom home at a reasonable price,” Mr Martin said.
Suburbs to south of the city, “from Noarlunga through to Seaford” also offer affordable homes with good access to public transport, he said.
In 2018, Noarlunga Downs saw its median house price fall by 7.33 per cent to $347,500.
For good value homes closer to the city, Mr Martin likes Rostrevor (where the median house price fell by 0.08 per cent over the past year to $637,500) and Woodville South (down 6.10 per cent to $508,000), but he is wary of Playford due to “some real concerns” about oversupply.
Queensland’s capital growth hotspots
Nabbing a ‘bargain’ property doesn’t necessarily mean buying a ‘cheap’ one, Riskwise Property Research chief executive Doron Peleg said.
“It’s more about knowing where to buy for long-term capital gain,” he said.
“Sure, there are a lot of well priced houses out there but if they are not expected to grow in value down the track then they aren’t the best buy.”
The firm found 10 affordable suburbs Australia-wide with “solid capital growth” prospects, and the majority are in Queensland.
The Brisbane suburb of Gordon Park, five kilometres north of the CBD, made the list with a median price that rose 10 per cent over the past year to $835,513.
On the Gold Coast, the “waterside lifestyle suburb” of Hollywell offers older-style houses “ripe for renovation”, close to schools, shops and the beach, with a median price that shot up 13 per cent in the past 12 months to $786,614.
Low price points with solid prospects
For good buys at a lower price, it pays to look to infrastructure and jobs-rich regions outside the major cities.
The Victorian suburbs of Norlane and Lovely Banks (median house prices of $370,931 and $455,868) are among Australia’s best-value, affordable suburbs, Mr Peleg said.
Located in the port city of Geelong, both suburbs saw capital growth of 26 per cent over the past year and are expected to rise further in coming years.
“These are affordable suburbs that enjoy strong demand during a period of lending restrictions and lower borrowing capacity,” Mr Peleg said.
Victoria’s second city can offer better value for money than greater Melbourne.
“Geelong has benefited from high population growth, a rise in infrastructure projects, an improved economy and more jobs, and this has greatly increased the popularity of the area,” Mr Peleg said.
“It only takes an hour to drive to Melbourne and housing is significantly more affordable, it is ticking plenty of boxes for a lot of people with their eye on capital growth in the future.”