2 weeks ago
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Georgia Boyd and Nick Robertson don’t see as much of each other these days – at least not midweek. Since committing to save a deposit to buy their first home, they have been living on opposite sides of town.
“I am living with my parents, and he is living with his,” Boyd said. “We have been saving for a deposit for the past year, and we have been looking for the past five or six months, looking at which suburbs we want to live in, how much we want to spend.”
On weekends Boyd, 26, who works in human resources, and Robertson, 31, who works in corporate event management, travel from their parents’ homes in Kellyville and Alfords Point, respectively, to inspect properties. With a budget of $880,000 to $975,000, they expect their first home to be an apartment. So far, they have saved about $90,000, and they plan to take advantage of the federal government’s 5 per cent deposit scheme for first home buyers.
While they are casting a wide net, Boyd said that finding the right property was a balancing act.
“We’re no strangers to travelling for work, but something closer to the city would be amazing,” she said. “But we’ll be compromising on the size of the place, as well as things like strata fees.”
Data from the latest Domain House Price Report reveals home price growth has been strongest in suburbs popular with first home buyers as they trade location for home size.
Woolloomooloo recorded the strongest growth for units in the past year, up 26.5 per cent, while more than half the suburbs with a house price growth of 20 per cent or more sit at least 20 kilometres from the centre of Sydney. Price increases in both Oatlands and North Richmond were above 30 per cent, while in Airds, which has a median house price of $903,250, prices rose 20.6 per cent over the past 12 months and are up more than 75 per cent on five years ago.
Domain chief of research and economics Dr Nicola Powell said affordability was a common theme in this quarter’s data.
“When you are looking at some of those outer locations, it’s where houses are most affordable,” she said. “This is where first home buyers are concentrated, and also where [we are seeing strong] population growth.”
Areas such as Woolloomooloo – where social housing, affordable apartments and luxury waterfront properties are all part of the mix – are becoming more attractive to owner/occupiers and investors, Powell said, thanks to their proximity to the city.
“[Buyers] are prioritising location and what they are compromising on is space,” she said. “In Woolloomooloo, it’s gentrification at its core. It’s also an investor-driven market.”
Where first home buyers are trading off longer commute times for a detached house, Powell said the secret sauce was access to infrastructure.
“Infrastructure reshapes demand,” she said. “If you improve access or reduce commute times, or you make a suburb much more accessible, it has an impact on price. There are many things that drive growth, but in Sydney, commutability drives price.”
Ray White chief economist Nerida Conisbee said she expected house price growth to slow in coming months as the broader economic outlook was pessimistic.
“Interest rates have risen twice already, and we could see more increases,” Conisbee said. “Unemployment is of concern, and general consumer confidence is extremely low – and that does flow through to housing.”
However, more affordable markets will be exceptions.
“We are continuing to see very strong price growth in a lot of the cheaper markets,” Conisbee said.
After two interest rate rises and amid international uncertainty, Kate Browne of financial comparison site Compare Club said buyers were “settling into” the new normal, with concerns about home prices no longer topping the list.
“Property prices have levelled out and [buyers have] settled into it and come to an understanding that we may see more rate rises,” said Browne, head of research and insights. “They are accepting that an apartment will be their first home. They are being more pragmatic.”
People were also accepting more help.
“Lots of people are relying on the bank of mum and dad, and that’s not a loan, it’s a gift,” Browne said.
Boyd is grateful for the support of her parents: she is living virtually rent-free while saving and well aware that not all her cohort are so fortunate.
“We’ve been able to save through the generosity of both our parents,” Boyd said. “Nick has moved home and I pay a minuscule amount of rent.
“The age I am at, everyone either is married, having babies and buying property or it’s the opposite end where they think the world is going to crap and they’re spending their money on holidays.”
