Is your dream suburb within reach? Here's what your budget really buys

The data shows there are 106 suburbs in the capitals where 100% of houses are valued at less than $1 million, the vast majority of which are located in outer areas where land is less scarce and properties are much more affordable as a result.

Even a more modest budget of $800,000 would be sufficient to purchase 100% of houses in 30 capital city suburbs, most of which were located on the urban fringe.

On the other hand, the suburbs with the lowest proportion of houses under $1 million are found in the priciest pockets of the capitals, such as Sydney and Melbourne’s eastern suburbs or the inner suburbs of Brisbane, Adelaide and Perth.

The analysis also shows that buyers with limited budgets still have a chance to find a home in pricey areas, although they may have to adjust their expectations in suburbs where affordable homes are rarer.

The data uses PropTrack’s automated valuation model (AVM) to estimate the value of every Australian property. The proportion of the total number of homes in each suburb that fall below different price thresholds was then calculated.

The analysis includes estimates for the value of all properties, not just those currently on the market. 

REA Group senior economist Anne Flaherty said the data laid bare the affordability challenges facing buyers seeking to purchase a home close to the CBDs of Australia’s largest cities.

“What it shows is that more and more people are being locked out of our inner- and middle-ring suburbs, and that’s leading to a shift in the demographics in different areas around our capital cities,” she said.

However, Ms Flaherty said that even pricier suburbs with small proportions of affordable houses could still have options for buyers with limited budgets, but these homes were likely to require renovations.

 “The main reason you would see a home in a more expensive suburb sell at a discount is because there’s actually money that needs to be spent doing it up,” she said.

“It basically comes down to what you're willing to compromise on – what’s more important, the location or the house?” 

Ms Flaherty said knowing the proportion of homes selling within a buyer's price range could help guide their property search.

“People might assume that a particular suburb is out of reach, but if they see they can actually afford one third of the homes in the suburb for example, it broadens the range of potential suburbs they can look in,” she said.

“Alternatively, you might have your heart set on a particular suburb, but then you can see that it’s most likely going to be out of your budget.”

Sydney buyers increasingly need to search further west to find sub-$1 million houses – this three-bedroom Leppington house just sold for $991,000. Picture: realestate.com.au/sold

Where $1 million buys the most homes

The analysis shows that buyers looking for a sub-$1 million house in a capital city are much more likely to find one in a suburb further from the CBDs, while inner suburbs typically have a much lower proportion of affordable homes.

For example, in Sydney a $1 million budget would be sufficient to buy 100% of houses in Lethbridge Park, Tregear or Blackett – among the most affordable suburbs in the city. 

The same budget affords 24% of houses in Leppington, 16% of houses in Granville, and 13% of houses in Parramatta.

Real estate agent and Laing+Simmons Parramatta principal Ray Fayad said houses under $1 million in the Parramatta area were becoming “extremely rare”.

“It’s been ages since I sold one under $1 million,” he said.

The traditionally-affordable area was experiencing increased interest from buyers from other regions such as the inner west, Mr Fayad said, while interest rate reductions and the potential of further cuts had helped drive price growth this year.

“I’m finding a lot of the locals from here are going further west to afford a first home,” he said. “They’re going further out than they once were.”

Bumping the maximum purchase price up to $1.5 million affords 14% of houses in Penshurst, 30% of houses in Menai and 43% of houses in Rouse Hill.

But spending up to $2 million opens up more options, including 7% of houses in Kensington, 42% of houses in Leichhardt and 73% of houses in Engadine.

A $1 million budget buys at least 10% of homes in just under half of Sydney suburbs. However, in Sydney’s 100 priciest suburbs, there are precisely zero houses that are valued at $1 million or less.

Buyers with $1.5 million to spend will find plenty of options in Engadine, where this three-bedroom home on a 591sqm corner block recently sold for $1.4 million. Picture: realestate.com.au/sold

In Melbourne, $1 million would afford 100% of houses in Broadmeadows, St Albans and Frankston North. 

The same budget could buy two thirds of houses in Footscray and about a quarter of houses in Yarraville or Seddon.

Inner west real estate agent and Village Real Estate managing director Huss Saad said entry-level houses in Yarraville or Seddon ranged from about $900,000 to $1.1 million, and could include older freestanding homes or newer townhouses.

“You can buy something sub-$1 million on a decent size block,” he said. “It might be a period home with a white picket fence that needs some work, but the opportunities are there.”

“In suburbs like Footscray and West Footscray, you can get a bit more bang for your buck.”

Meanwhile, buyers with a larger $1.5 million budget could afford 85% of houses in Collingwood, 59% of houses in Moonee Ponds and 47% of houses in Williamstown.

Buyers with $2 million to spend in Doncaster would be able to afford almost every property in the suburb, including this five-bedroom home that recently sold for exactly $2 million. Picture: realestate.com.au/sold

But with $2 million to spend, a Melbourne buyer could afford 97% of houses in Doncaster, 82% of houses in Carlton and 74% of houses in St Kilda.

In some of the smaller capitals, there are plenty of suburbs where buyers with $1 million to spend would theoretically be able to afford any property.

Perth has 34 suburbs where all houses are valued at $1 million or less, including Lockridge, Balga, Bertram and Armadale.

In Adelaide, there were 32 suburbs where $1 million could afford every house, including Andrews Farm, Morphett Vale and Ottoway.

Brisbane has 21 suburbs fitting the same brief, most of which are in the Ipswich and Logan regions, including Riverview, Woodridge and Crestmead.

For buyers searching for an affordable unit, there are plenty of suburbs that are in contention, and many more options closer to city centres.

In Sydney, buyers will find a high proportion of units priced under $500,000 in Carramar (69%), Lakemba (67%), Harris Park (58%) and Cabramatta (52%).

Melbourne buyers with the same budget would find a big share of sub-$500,000 units in Melton (97%), Notting Hill (75%), Carlton (61%) and the CBD (50%).

In Brisbane, a $500,000 budget would afford plenty of units in Logan Central (95%), Woodridge (79%), Caboolture (44%) and Fortitude Valley (32%).

Suburbs where a multi-million budget still falls short

At the other end of the spectrum, the data shows that in some ultra-pricey suburbs there’s slim pickings for even buyers with multi-million dollar budgets.

In many of the pricey harbourfront suburbs in Sydney's east and north, sub-$3 million houses are exceptionally rare. Picture: Getty

In harbourfront Sydney suburbs such as Clontarf, Longueville and Double Bay, less than 3% of houses are valued at under $3 million.

There were 24 Sydney suburbs where a $3 million budget affords less than 10% of properties, reinforcing just how pricey properties are in the city’s most exclusive suburbs.

“These have become exclusive suburbs where people are locking up a lot of wealth,” Ms Flaherty said.

“Buying a house in them is just not even in the realm of possibilities for almost everyone."

Even in Queens Park in Sydney’s east, where 15% of properties are valued at less than $3 million, real estate agent and Belle Property Bondi Junction principal Edward Brown said buyers would likely need to make some sacrifices to buy a home under that price point.

A budget of $3 million would buy about half the houses in Balwyn, including this five-bedroom period home that sold for $2.58 million late last year. Picture: realestate.com.au/sold

“The ones under $3 million are typically quite small,” he said. “It'll most likely be a terrace rather than a semi, and it might be on a main road or something in need of significant work.”

In Melbourne, buyers with $3 million to spend could purchase about a quarter of houses in Toorak or Deepdene, a third of houses in East Melbourne or Canterbury and little over half of the houses in Balwyn or Malvern.

Only a third of houses in Teneriffe in Brisbane’s inner city would cost less than $3 million, but that same budget buys about two thirds of houses in New Farm, Ascot and Hamilton.

And in Perth’s priciest suburb, Peppermint Grove, just 16% of houses come in at under $3 million, while 19% of Dalkeith houses and 42% of Cottesloe houses fall under this threshold.

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