With so much attention focused on Melbourne's million-dollar suburbs, particularly in the inner city, and the growth in the city's prices in recent months it is easy to lose sight of just how affordable some suburbs still are.
REIV CEO Enzo Raimondo said that while the strength of the market is no doubt challenging for first home buyers and those keen to move to a better home, it is still possible to find a bargain home in Melbourne.
New median price data shows that Melbourne's most affordable suburb is Melton West, at $270,000. And in our next most affordable suburb, Werribee, the median price is just over $300,000.
While these are outer ring suburbs they all have good transport links, schools and quality housing stock. And they are convenient to lifestyle facilities such as green space. For those who have found their preferred suburbs no longer affordable, it is worth considering these relatively cheap suburbs which offer good potential for future capital growth.
Others in the top 10 most affordable suburbs – based on the most recent quarterly data, released by the REIV – were: Cranbourne, Carrum Downs, Wyndham Vale, Craigieburn, Deer Park, Hoppers Crossing, Pakenham and St Albans.
Median house prices in these suburbs – that is, the mid-point of all sales in the area for the quarter – ranged up to $365,000.
While these prices represent the mid-point of sales, it’s worth noting that there are houses in these suburbs that are priced well below the mid-point.
In the June quarter, the lower and upper quartiles for each suburb – that is, the cheapest and more expensive 25 per cent of sales in each suburb – were also collated.
In Werribee, the lowest quartile median price was just $272,500, and in Cranbourne it is $292,500. Even in the suburb tenth on the list, St Albans, the lowest quartile price was $334,000.
The potential offered by homes in these areas is good news for both those looking for more affordable housing and for investors with an eye to long-term capital gain. It is true that the cheapest of homes are often not in prime condition. But for those with time and DIY skills such a purchase can bring the chance to add value to an affordable property, substantially increasing the owner's equity.
Even if the location is not the buyers' first preference, buying in a new suburb may provide the opportunity for a new start, with the like-minded neighbours – young families starting out in the property market, for example. It can also mean the chance to get a foothold on the property ladder with a buy-to-rent purchase for those lacking the funds to buy in their preferred area.
Once on that rung, the property owners will, in future years, be able to use this asset to move further up the market.