Paul's Insights: Affordability plus rate cuts - good news for first home buyers

According to the Affordable Suburbs Report, Mount Magnet in outback WA scoops the pool as the nation’s cheapest suburb. As long as you don’t mind living several hundred kilometres out of Perth, it’s possible to buy a house for $37,000.

Of course, the bulk of our population is clustered around state capitals, and the current market offers some exceptional value. In Sydney and Melbourne, home values have slipped 13.9% and 10.3% respectively since peaking in late 2017.

As a guide to the value on offer, Sydney’s cheapest suburb for houses within 20km of the CBD, is Granville, with a median value of $648,000. But it can be possible to pick up a house further out in the Blacktown area for under $450,000.

In Melbourne, Melton offers a median house value of $389,190. It’s the city’s only suburb where a budget below $400,000 could secure a house. The big surprise is that popular inner ring suburbs like Coburg, Carlton and Prahran all have median apartment values below $525,000.

In Brisbane, it wasn’t so long ago that some pundits were tipping an oversupply of inner city apartments. But according to the Aussie/CoreLogic study, this imbalance is starting to even out as population growth absorbs the supply of units.

Brisbane values have held relatively steady over the past few years, and it’s one of the more affordable cities for first home buyers. Five suburbs within 10km of the CBD have a median house value below $600,000.  The cheapest is Rocklea with a median of $388,000. 

The cheapest inner ring suburb for units is Spring Hill, where a budget of $340,000 could secure a first home. Buyers prepared to look further out can pick up an apartment in Kooralbyn for $120,000.

Along with lower property values, first home buyers can also take advantage of a competitive mortgage market.

Figures from Mozo show 23 lenders have cut home loans rates since the start of March. Bendigo Bank for instance trimmed its basic variable home loan rate by 0.2%. ME Bank has slashed its fixed rates by up to 0.5%.

It goes to show that if you’re aiming to take that first step on the property ladder, it pays to shop around for the suburb you buy in – and the lender you choose, to stretch your budget further.

The full report can be downloaded from www.aussie.com.au/mostaffordablesuburbs.

Paul Clitheroe is Chairman of InvestSMART, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.