Cheapest pockets revealed: How to buy into premium suburbs for less

Believe it or not, a $500,000 budget is enough to buy a home in some of Australia’s most expensive suburbs – if you know where to look. 

A deep dive into property values has revealed that even in many of Australia’s priciest suburbs, such as Hunters Hill, New Farm and Toorak, there are pockets of affordability where properties sell for well within a first-home buyer budget.

A PropTrack analysis of suburbs broken down into SA1 regions — which are small neighbourhoods comprising a few streets — has revealed the cheapest areas in each suburb where buyers stand to save the most money.

Use the interactive to see how property values vary across your suburb.

In these areas, a typical property can cost half as much as a suburb’s median home value, and in some cases as little as 10% of the price of properties in the suburb’s most expensive precincts.

The data shows that bargain-hunting buyers don’t always need to shift their search grid beyond their favourite suburb’s boundaries, with each containing affordable pockets where homes are cheaper than the rest.

The data uses PropTrack’s automated valuation model (AVM) to determine the median home value in each suburb and its SA1 regions.

PropTrack senior economist Eleanor Creagh said the big gap in pricing between the priciest and cheapest pockets in a suburb meant it was possible to buy into some premium suburbs with a limited budget, providing buyers were willing to compromise.

“Even in the priciest suburbs, there are pockets where property prices are significantly lower,” she said.

There are pockets in every suburb where more affordable properties can be found. Picture: Getty

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“Buyers with a constrained budget can still purchase in a pricey or prestigious suburb by compromising on property size, proximity to premium amenities, and view or location within the suburb.”

How much can you save buying into a cheaper pocket?

Buyers can save hundreds of thousands of dollars — and in some cases, millions —  by purchasing a home in the most affordable pockets of a suburb instead of the most expensive.

Across Australia, the median difference in values between the cheapest and priciest pockets within suburbs is $325,000 for houses and $239,000 for units.

But in some suburbs, the difference is much greater, especially in premium areas at the top end of the market.

Take Hunters Hill for example. The affluent waterfront suburb on Sydney’s lower north shore has a median unit value just shy of $1 million, while typical houses are worth close to $4 million, but in an affordable pocket in the suburb’s west away from the water, the median unit value is just $562,000.

There are pockets in the west of harbourfront Hunters Hill that are much more affordable than in the east. Picture: realestate.com.au/sold

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In Brisbane’s New Farm, apartments in one riverfront pocket are mostly worth more than $3 million, but a pocket a few streets away from the water, the median unit value is $475,000.

Within the blue-ribbon Melbourne suburbs of Kew, South Yarra and Hawthorn, there are pockets where houses can be found for about $1 million, while in other parts of these suburbs median prices exceed $5 million. South Yarra and Hawthorn both have sub-$400,000 pockets for units, too.

This two-bedroom house in a more affordable part of South Yarra sold for $1.05 million. Picture: realestate.com.au/sold

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Even more typically-priced suburbs have cheap and pricey pockets, including Reservoir in Melbourne’s north, which has a median house value of $877,000 – close to Australia’s overall median house value.

Houses in pockets of Reservoir’s south within a short walk of the train station are typically worth about $1.2-1.3 million, while in the north, further from the city, there are pockets where houses can be bought for about $750,000.

The suburbs with the biggest difference between cheap and pricey pockets tend to be among the most expensive within their market.

In Toorak, Melbourne’s most expensive suburb, there is an $11.7 million difference between the cheapest area, where a typical home costs about $2.6 million, and the priciest pocket, which has a median value of $14.3 million.

This three-bedroom semi proves it's possible to buy into Toorak for less than $2 million. It sold for $1.575 million last year. Picture: realestate.com.au/sold

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“Expensive suburbs often have a mix of property types from mansions to townhouses and units, meaning a wide range of housing values within a suburb,” Ms Creagh said.

Buyers often pay a premium for certain streets or water views in prestigious suburbs, Ms Creagh said, which creates a big price difference between affordable pockets and a blue-ribbon position.

Beachfront units at Glenelg in Adelaide, including this two-bedroom apartment that sold for $2 million, are typically worth about three times the price of units a few blocks back. Picture: realestate.com.au/sold

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Analysing typical home values based on their location within a suburb shows that it’s still possible to buy into a highly desirable area for much less than the suburb’s overall median price.

“Certain prestigious suburbs still have affordability gaps, making them accessible to a range of buyers depending on their budget and compromise level,” Ms Creagh said.

Why some pockets are cheaper than others

Ms Creagh said some of the factors that made parts of a suburb cheaper than others included smaller lot sizes, older housing stock and higher density. Conversely, areas with newer, larger homes tended to be more expensive.

Buyers could also save by purchasing in an area that was further from a suburb’s most desirable aspects, such as dining and retail precincts, public transport hubs and green spaces, she said.

School zones can play a part, with some buyers often paying a premium for certain catchments or proximity to prestigious schools, which may not be a requirement for everyone.

Homes on or near busy main roads may be more affordable than properties in quieter, leafy pockets. Picture: Getty

Areas of a suburb situated close to industrial zones, highways or airports could also be priced lower than others, Ms Creagh said.

“Buyers may have to make compromises in cheaper pockets,” she said. “Although the suburb name might carry a premium, a specific pocket may lack appeal.”

“Smaller property sizes, less spacious blocks, no views and proximity to undesirable features like busy roads could be some of the compromises made.”

Why pricey pockets are so desirable

On the other hand, the parts of a suburb that have it all tend to be the most expensive. 

Homes in pricey pockets are often large and well-appointed, and may benefit from an elevated position or a quiet, peaceful streetscape. Picture: realestate.com.au/sold

If an area has large houses on big blocks, with convenient access to shopping and amenities, chances are property prices will be higher.

Proximity to beaches, rivers and lakes can magnify the effect, with wealthy buyers more willing to splurge to enjoy water views or a short stroll to the beach, pushing up prices.

Real estate agent Alexander Phillips of PPD Real Estate said the scale of a view mattered, with a panoramic ocean outlook worth far more than a mere water glimpse.

“Where you pick up the biggest uplift is if you’re seeing sand and crashing waves,” he said. “It could lift a house from $5 million to $8 million.”

Properties with ocean views have increasingly become more desirable and tightly-held, Mr Phillips said, meaning the premium paid for view had grown significantly.

In already-pricey suburbs, a water view can push prices up by millions. This six-bedroom Sydney home with panoramic views of Bronte Beach sold last year for $14.8 million. Picture: realestate.com.au/sold

“Views give you a feeling of space, light and openness, so it's not just about the blue water,” he said.

Ms Creagh said homes near luxury amenities including fine dining, high-end shopping and cultural attractions could also drive higher home values in a suburb’s priciest pockets.

“Larger block sizes, heritage-listed homes, and catchment zones for sought-after schools also play a role," she said.

Pricey and cheap pockets in Australia’s most popular suburbs

In Castle Hill, the most searched suburb in Sydney last year, one of the suburb’s priciest pockets is found in the north, near Balintore Drive, with median values of almost $2.8 million.

“It's one of the best pockets in Castle Hill,” said real estate agent David Choy of McGrath Castle Hill. “You're right next to Heritage Park, and you can also take a shortcut to Oakhill College.”

This large, six-bedroom home in Castle Hill's priciest pocket recently sold for $3.15 million. Picture: realestate.com.au/sold

“The homes are very large and on big blocks averaging 1000 to 1200sqm. The homes are quite young, maybe around 20 years old, and they’re all beautiful homes. Some have pools and tennis courts.”

At the other end of the spectrum, typical homes in the suburb's south are usually priced closer to $2 million.

“That’s entry-level in Castle Hill,” Mr Choy said. “It was the first area developed 60 years ago, and the homes are smaller.

In Melbourne’s most searched suburb, Richmond, a pocket filled with large, ornate houses near the train station and the MCG is the suburb’s most expensive, with a median value of almost $2 million.

But in the north, there are pockets where houses are typically worth closer to $1 million.

Jellis Craig Richmond director Elliot Gill said this mostly came down to the size of properties, which tended to be more compact in the most affordable pockets.

Pockets where houses and blocks are smaller tend to be the most affordable. This house in Richmond's north sold for just under $1 million. Picture: realestate.com.au/sold

“There’s a different feel across the different pockets,” he said. “There are pockets of Richmond which would be more popular, and others that would be seen as better value.”

In Adelaide’s favourite suburb, Glenelg, buying a house just a few blocks back from the beach will save punters more than $600,000 compared with near the beachfront, the data shows, while still allowing access to all the suburb’s amenities and attractions. For units, the difference is more than $1 million.

Coorparoo, Brisbane’s most sought-after suburb, has pockets in the east bordering Whites Hill Reserve, where median values are higher than $2 million.

“In the parts where you have those really premium price points, there are still big blocks, really beautiful properties and city views, and they’re really well-located for the good schools,” said real estate agent Julia Doyle of Place Camp Hill.

However, buyers were more likely to find a sub-$1.3 million home in the north, with houses near high-density areas or the main thoroughfare of Old Cleveland Road typically more affordable.

This three-bedroom house in a higher-density pocket of Coorparoo sold for $1.24 million last year – about $200,000 less than the suburb median, and $900,000 less than the priciest pocket. Picture: realestate.com.au/sold

“Some parts of Coorparoo have more units and townhouses and the zoning is a little bit different,” Ms Doyle said. “Areas where you get close to main roads or where you have more people and higher density living are less expensive.”

“You might not be buying on the best street because it’s out of reach,” she said. “You’re going to have to make some exceptions on what you're looking for if you want to get into a really hot suburb.”

By compromising on the size of a property or its position within a suburb, buyers may find a way into their favourite suburb for less, while still being able to enjoy the benefits of living in the area.

With prices expected to rise as interest rates fall, an affordable pocket could provide the opportunity to buy into a desirable suburb without a premium price tag – before price growth really takes off again.

This article first appeared on realestate.com.au and has been republished with permission.