COVID-19 has opened a window for buyers in well-serviced, well-located suburbs that 12 months ago would have been out of reach, national property research consultancy Macroplan says.
Buoyed by cheap debt, buyers are increasingly shunning dense urban centres and “liveable” suburbs, instead eyeing “affordable” areas where they can live at a safe distance from their neighbours and embrace flexible work arrangements permanently. For many workers, not having to commute to work every day has meant homebuyers are now looking at suburbs a few kilometres further afield from the CBD than they would have ordinarily considered.
Recent reports have suggested that house prices will continue to fall during the next year or so as government stimulus tapers off and unemployment potentially rises, in turn further deteriorating household incomes, improving affordability for buyers.
Population growth, a key driver in the housing market, is forecast to fall from 1.2 per cent in 2019-20, to just 0.2 per cent in 2020-21, and 0.4 per cent in 2021-22, while the population is expected to be 1 million people fewer than forecast last year.
Despite this downturn in immigration, detailed population forecasts in the budget suggested affordable suburbs were primed for enquiry and subsequent price increases. In Brisbane and Perth it will be due to ongoing increasing mining investment, according to Macroplan, while in Adelaide it will be caused by the naval shipbuilding program. In Melbourne and Sydney it will be caused by flight from the CBD and the suburbanisation of jobs.
Aspiring purchasers have flocked back to the market in recent months, with the value of all housing-related lending surging by a massive 12.6 per cent in August, in search of accessible pricing.
Indicators of rising demand in affordable suburbs are often determined by high auction clearance rates, low vacancy rates, low discounting and quick selling times.
Macroplan said August dwelling approval results revealed increasing demand for detached housing in the wake of the relaxation of restrictions in most states and territories, however, approvals for apartments remain weak—at near eight-year lows. These approval numbers mask the impact of first home buyers in the marketplace, the report continued: “In August, they reached 37 per cent of all owner-occupier dwellings and have driven lending indicators to new highs without the influence of investors.”
Looking away from metro centres, a recent report published by Corelogic identified the best-performing affordable suburbs nationwide for prospective first home buyers and first-time investors.
Topping the list was Broken Hill in NSW, where the median value of houses has increased by 30.7 per cent over the past 12 months to $120,000. In Victoria, the historic town of Orbost in East Gippsland’s Snowy River country saw values surge 25.6 per cent to a median $200,500 across the year. In Queensland the standout performer was the coal mining town of Moranbah, where the median value of houses has lifted 23.9 per cent to $238,000, riding the cyclical nature of the resources industry.
Corelogic defined affordable suburbs as having a median price of less than $500,000, ranking them according to capital growth over the past 12 months. To make the list, suburbs also had to show good historical growth over three- and five-year periods.
As a buyer, you might find that you’re now considering other elements of your future home, rather than just its proximity to the office and/or your children’s schools. You might, as the report suggests, find yourself looking at homes that have a higher ‘liveability’ index: that is, homes from which you can walk to most amenities, and where it’s comfortable to work from home at least a few days per week. Bigger yards and more space for “me” time might also be jumping up the ranks in terms of your personal importance.
No matter what though, it is important to invest your money in a home that both suits your lifestyle, and that will appreciate over the coming years. To pick the best growing suburb for you, check out these articles: