New analysis has lifted the lid on the most affordable and liveable suburbs in Sydney, Melbourne, Brisbane, and Hobart in the second half of 2020.
Research from PRD Real Estate found Padstow Heights (Sydney), Bundoora (Melbourne), Boondall (Brisbane), and Kingston (Hobart), were some of the best suburbs for houses in terms of affordability and liveability.
Bundoora and Kingston also featured in the best suburbs for units, as did Sans Souci (Sydney), and Griffin (Brisbane).
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Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.
Affordability was judged by suburbs having a median price below a set threshold, while liveability was judged by having low crime rates, access to amenities, and an unemployment rate on-par or below the state average.
Other factors like sales transactions, rental yield, and total estimated value of future project development were also taken into account.
PRD chief economist, Dr Diaswati Mardiasmo said some trends seen in the first half of 2020 had continued into the latter half of the year, despite the tumultuous period.
"It is evident that in general, Sydney and Melbourne have the highest entry prices, yet the lowest rental yields, Dr Mardiasmo said.
"This is a similar pattern to the 1st Half 2020 report, despite COVID-19 restrictions and further lockdowns in both capital cities.
"Hobart median prices are now on-par with Brisbane, which suggests affordability in Hobart has declined."
Dr Mardiasmo said Brisbane took the gong for most affordable and liveable city.
"Comparing all affordable and liveable suburbs within all capital cities, Brisbane arguably provides home buyers and investors with the most “bang for buck”.
"This is particularly true in the unit market, due to having the lowest median prices and highest rental yields."
Affordable and liveable suburbs
Source: PRD Real Estate
Sydney and Melbourne most affordable for liveability
PRD analysed affordability versus liveability in each capital city by finding the percentage difference between the state average home loan and the median unit and house prices in metro areas and the aforementioned affordable and liveable suburbs.
The cost of liveability was found to be the highest in Hobart, recording the only positive premium difference.
Dr Diaswati said Sydney was the most affordable city for liveability, closely followed by Melbourne, with both recording large negative premium price differences.
"This finding may surprise many, as Brisbane and Hobart were originally thought of as the more affordable capital cities," she said.
"While this may be true from a median property price perspective, many affordable suburbs in both capital cities fail to satisfy other criteria such as liveability, investment return, and future project development plans."
Sydney and Brisbane a first-home buyers haven
PRD's analysis of access to the market found the Sydney Metro and Brisbane areas to be a haven for first-home buyers.
"The bulk of both house and unit sales in Sydney and Brisbane were in the lower-middle price brackets, although there was a significant difference in actual median property prices," Dr Diaswati said.
However, Sydney was the most expensive capital city for both houses and units, with its middle price brackets substantially higher priced.
"For example, a middle-priced house in Brisbane sits within $700,000 to $900,000, whereas in Sydney it is $1.5m-$2.0m – essentially double the price."
Melbourne was found to be a "split" capital, with equal activity in lower and premium price brackets.
PRD put this down to COVID restrictions, with highly impacted suburbs experiencing greater affordability, providing a great opportunity to first-home buyers.
Hobart was found to be the least first-home buyer friendly capital city market, particularly for houses, with the bulk of house sales in the premium price bracket.
"The Hobart unit market is friendlier to first home buyers, as there is a “split” unit market; both lower-middle price and premium price brackets show equally high sales activity," Dr Mardiasmo said.
The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:
- The big four banks are: ANZ, CBA, NAB and Westpac
- The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
- The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.
In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.
*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may inﬂuence the cost of the loan.
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