- Low interest rates continue driving house prices upward
- Affordability concerns for younger people
- CoreLogic analyses which suburbs are most affordable at the moment
As has been well recorded in 2021, historically low interest rates and a multitude of government stimulus measures have driven the current housing boom to record highs.
For years, owning a home has been part of the Australian dream. It represents the stability, independence, dignity and freedom of reaching adulthood while being a sound, long-term investment to build wealth well into retirement.
As the Reserve Bank is committed to a prolonged period of low rates until at least late 2023-24, understandably, many people are concerned about the precarious affordability situation.
Despite the Federal Government announcing measures in the budget making it easier to enter the housing market (such as the First Home Loan Deposit Scheme), these may only continue to drive demand up such that it will outstrip supply, further raising prices. There have been many incentives to drive up housing demand, but fewer changes to tackle supply shortage problems.
CoreLogic estimates that there were 164,000 dwelling transactions in Australia, while just 136,000 new properties were added to the market for sale in the same period. And while this figure is higher than the five-year average, the supply stock is being quickly absorbed.
Rising house prices are great for investors (especially with tax arrangements such as negative gearing) and those who already own a home. But it might not look so great for young people and first home buyers looking to get their foot in the door of the housing market.
To shed some light on where prospective buyers can find a reprieve, CoreLogic has analysed suburb-level listings to determine the likely most affordable areas in Australia.
Their analysis is based on two factors:
- Areas where there looks to be more stock of housing available than in previous years, and
- Areas where dwelling value increases have not surged as much as in surrounding suburbs.
Here are the results of where prices have not kept pace with the broader market:
Australian Capital Territory
- Phillip
- Latham
- Dickson
- Richardson
- Higgins
New South Wales
- Macquarie Park
- Lidcombe
- Rockdale
- Randwick
- Westmead
Northern Territory and Tasmania
- The Gap (NT)
- Wanguri
- Hobart
Queensland
- Fortitude Valley
- Bowen Hills
- Mulambin
- South Townsville
- Park Avenue
South Australia
- Para Hills West
- Bowden
- Kilburn
- Bedford Park
- Everard Park
Victoria
- Melbourne
- South Yarra
- Hawthorn
- Carnegie
- Port Melbourne
Western Australia
- Nickol
- Nedlands
- Crawley
- Baynton
- Inglewood
Although dwelling values have not risen as drastically in these suburbs compared to surrounding ones, only 5 of them have recorded a decline in dwelling values year on year.
Many of the suburbs are inner-city or high density locations, where housing demand has been softer through COVID-19.
Suburbs in Hawthorn, Philip and Macquarie Park are being supported by new developments, increasing new supply which will dampen price increases. Meanwhile, demand in suburbs popular with overseas migrants and international students has declined.
Overall, CoreLogic’s data indicates that buyers willing to purchase in higher density metropolitan areas will have a greater choice of stock.
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