Where to buy into a million-dollar Sydney suburb for half the price
Sydney’s “million-dollar” suburbs may not be as far beyond reach as the seven-figure price tag suggests.
The number of Sydney suburbs with a median house price above $1 million topped 320 in 2016 but hundreds of home owners bought into these neighbourhoods for much less, according to a Fairfax Media analysis of house sales in 2015-16.
What the median doesn’t tell you
Median house price is probably the most widely used measure of a suburb’s affordability but it can mask big variations within a suburb. Say 100 houses are sold for $1 million each in Suburb A while, in Suburb B, 50 houses are sold for $500,000 each and 50 are sold for $1.5 million each. The median sale price in both suburbs is $1 million but Suburb B is arguably more affordable.
This is why distribution matters. In some suburbs, the cheapest houses are up to half the median price. In others, sales are bunched tightly around the median.
Fairfax Media compared the cheapest 10 per cent of houses to the median price in every Sydney suburb within 30 kilometres of the CBD to find where you should look to buy the worst house in the best street.
The top five
Artarmon on Sydney’s north shore scraped into the $2 million dollar club this year but one in 10 houses still sold for less than $990,000, or 49 per cent of the median.
Similarly, in Strathfield in the inner west, which boasts a median price of $2.1 million, the cheapest houses sold for $1.1 million, or 54 per cent of the median.
The cheapest houses also went for about half the median in Rose Bay and Woollahra in Sydney’s east, and Mosman on the lower north shore. With median prices between $2.7 and $3.8 million, however, the cheapest houses were still priced up to $1.9 million in Rose Bay, $1.7 million in Mosman and $1.4 million in Woollahra.
Suburbs with a median below $2 million
In each of the top 20 suburbs, one in 10 buyers paid less than 65 per cent of the suburb-wide median, the analysis shows.
Ashfield and Matraville were among the most affordable suburbs with median prices around the $1.5 million mark, with the cheapest houses going for less than $890,000, or 61 per cent of the median price.
In Sans Souci and Asquith, which both have median prices around $1.2 million, the cheapest houses sold for less than $766,000 or 63 per cent of the median.
Among the suburbs with a median price of $1.1 million, Campsie and Lidcombe were among the most affordable, with the cheapest houses selling for less than $675,000 or about 60 per cent of the median price.
“House price diversity is a good measure for social diversity within a locality,” said UNSW professor of housing research and policy Hal Pawson.
“Local price disparity can increase when a new development brings higher value properties into the market. But a single big development can make a big difference to a local property price profile in the year the new homes are sold.”
How Sydney prices have changed
Between 2012 and 2016, the price rise among Sydney’s cheapest houses closely followed the median price rise.
The median for suburbs within 30km of the CBD rose by 73 per cent to $1.2 million, while the cheapest houses rose by 71 per cent to about $700,000.
But in some suburbs the price of the cheapest houses increased far more quickly than the median, putting these suburbs even further beyond the reach of the average income-earner.
For example, in Kensington in Sydney’s east, the price of the cheapest houses rose 1.5 times faster than the median price, surging 209 per cent, from $750,000 to $1.6 million.
Similarly, in Fairlight near Manly, and South Coogee, in Sydney’s east, the cheapest houses increased 1.3 times faster than the median price: from $700,000 in Fairlight and $970,000 in South Coogee to $1.6 million.
By contrast, in other parts of Sydney, the change in median price outpaced the change among the cheapest houses, making these suburbs more affordable than the median price suggests.
In Artarmon, for example, the median price rose 1.6 times faster than the price of the cheapest houses, while in Campsie it rose 1.3 times faster.
The cheapest way into a million-dollar neighbourhood
Buying a unit is the cheapest way into the million-dollar club of suburbs.
The biggest difference between the median and cheapest units was found in the inner city suburb of Ultimo. Here, the cheapest units sold for $240,000 or 30 per cent of the median price of $800,000.
Units also offered cheaper access to some of Sydney’s most expensive harbourside suburbs. In Milsons Point, on the lower north shore, the cheapest units sold for $700,000 or 42 percent of the median unit price of $1.7 million.
In Rushcutters Bay and Darling Point, in Sydney’s east, the cheapest units sold for 48 per cent of the median or $450,000 in Rushcutters Bay and $900,000 in Darling Point.
The story Where to buy into a million-dollar Sydney suburb for half the price first appeared on The Sydney Morning Herald.