Affordable Suburbs and Superannuation Insights: May 2024

Affordable Suburbs for First-Home Buyers: Latest Trends and Insights May 2024

As we navigate through 2024, the Australian property market continues to show dynamic trends and shifts.

From the rising debate on using superannuation for property deposits to record-breaking house prices and affordable options for first-home buyers, there’s a lot to unpack.

Let’s dive into the latest updates and insights for the week ending 24 May 2024.

Super: Your Key to a Wealthy Retirement

First-home buyers using their superannuation for property deposits could be significantly better off in retirement. Modelling by actuaries Michael Rice and Jonathan Ng shows that:

• A 35-year-old who withdraws a 20% deposit (about $160,000) to buy an $800,000 apartment would be $1.2 million better off over 30 years.
• Leaving that amount in superannuation would only grow by $319,000 during the same period.

This new perspective brings hope to many young Australians looking to enter the property market.

However, the Superannuation Funds of Australia argues that allowing access to superannuation for deposits might only benefit those who can already afford property and could drive up property prices. This ongoing debate highlights the complexity of balancing immediate housing needs with long-term financial security.

Record-Breaking House Prices in Aussie Suburbs

By the end of April 2024, nearly half of all Australian suburbs achieved record-high median house prices. CoreLogic data reveals that:

• 43.6% of suburbs hit record highs despite two years of interest rate rises.
• Since April 2022, average house prices have increased by 2.8%.
• Perth saw the most significant increase in average house values of 25.7%.
• Hobart experienced a decrease of 11.2%.

Tim Lawless, CoreLogic’s research director, notes that Perth and Adelaide have become hotspots due to their relative affordability, strong rental conditions, and higher gross rental yields.

The surge in demand has outweighed supply, pushing property values significantly higher over the past year. This trend underscores the resilience and dynamism of the Australian property market.

Aussie Suburbs Joining the Million-Dollar Club

Property prices are rising so quickly that more markets are crossing the $2 million and $3 million thresholds. Domain data shows that median prices in suburbs like:

• Pennant Hills and West Ryde in NSW have surpassed $2 million.
• Hawthorne in QLD and Sandringham in VIC have also crossed the $2 million mark.
• Haberfield in Sydney has breached the $3 million barrier.

However, not all high-value suburbs are maintaining their status.

Byron Bay, Noosa Heads, Hamilton in Brisbane, and South Yarra in Melbourne have all dropped out of the $2 million club, with prices falling between 8.8% and 24.7% in the first quarter of 2024.

This fluctuation indicates that while some areas continue to thrive, others are experiencing market corrections.

Best Buys for First-Home Buyers

Good news for first-home buyers! The Property Pendulum report by Property Credit highlights locations where softening market conditions mean properties may be more affordable. These include:

• Victoria's Latrobe Valley: 667 houses available for less than $750,000, with listings up 26%.
• Tasmania's Launceston: 319 houses for under $750,000, with listings up 17%.
• NSW’s Lower Hunter: 302 houses available, with listings up 71%.
• Queensland's Maryborough: 295 houses for sale under $750,000, with listings up 24%.

Giordano Stephancic, Property Credit’s chief executive, notes that while the market may seem challenging, there are still plenty of locations outside capital cities where first-home buyers can find affordable options. This is a beacon of hope for many aspiring homeowners.

Land Prices Soar Amid Rising Demand

Land sales are on the increase, with many choosing to build despite constraints in the construction industry. The latest HIA-CoreLogic Residential Land Report analysed sales activity in 51 housing markets across Australia, identifying a modest recovery in residential lot sales, which has pushed up prices. Key points include:

• Lot sales picked up by 0.9% in the December Quarter, with a 24.6% rise over 2023.
• Brisbane, Adelaide, and Perth are seeing stronger activity.

Tom Devitt, HIA Senior Economist, reports that the re-acceleration of land prices alongside modest recovery in sales volumes indicates that the availability of shovel-ready land will be crucial to meeting Australia’s target of 1.2 million new homes over the next five years. State and local governments need to facilitate the availability of both greenfield and infill land to meet this demand.

In summary, the Australian property market continues to evolve with dynamic changes affecting both buyers and investors. Whether it's leveraging superannuation for deposits, navigating record-breaking house prices, or finding affordable options for first-home buyers, staying informed is key.

If you’re keen to learn more or discuss how these trends could impact your property plans, let’s catch up! Book a time for a one-on-one conversation here . Also, don’t miss our upcoming workshop on "Pay Off Your Mortgage in 10 Years." Claim your seat here .

Best regards,

Rupali

Your Independent Buyer's Agent