Door closes on inner-city homes for young Australians
Australians are scrapping the last remaining “bits of dirt” in inner cities as chronic housing undersupply pushes buyers to their limits.
New data from online listing platform Domain reveals a huge gap between what buyers can pay for detached homes and what’s available on the market.
Buyers searching for homes in Sydney, Melbourne and Brisbane are $300,000 cheaper than average listing prices within 10km of the city centre, Domain said in a report published on Wednesday.
“In terms of homes, this suggests that the inner ring is virtually unattainable for most buyers searching in that area,” Domain chief economist Nicola Powell told AAP.
Price gaps for homes are narrowing significantly as buyers look out; except Sydney, where listings are still $150,000 more expensive than searches in the middle ring.
In Melbourne, house listings were $100,000 lower than searches in mid-ring suburbs, and $50,000 lower for homes more than 25km from the city centre.
Emma Bloom, a buyer’s lawyer at Morell and Koren in Melbourne, said detached homes would always have higher potential for capital growth.
“Single-family homes are the best investment because God is not creating more land, so everyone wants their own little piece of land,” he said.
But as supply continues to decrease and demand continues to increase, a well-located block of land will become unattainable for many.
“The Australian dream would be a balcony with some sunlight instead of the Hills Hoist in the backyard,” he said.
According to findings from real estate data firm Cotality, the premium for a house per unit in capital cities reached a record high of $363,000, or 49.9 percent, in October.
This is a significant increase from five years ago, when houses were just 20 percent more expensive than units.
Sydney-based buying agent Chris Clarke says the huge post-Covid price rise is the “last straw” for young people hoping to buy a home in the inner city.
While some buyers have moved further afield in search of a piece of land of their own, others have opted to forego their desire for a single-family home to be closer to friends, family, work and amenities.
“It’s a bitter pill to swallow in both scenarios. You’re sacrificing a house for the location or location of a house,” Mr Clarke said.
Unit listings were below or in line with buyer searches along the urban gradient in all cities except Sydney’s inner ring.
But Justin Simon, founder of pro-development group Sydney YIMBY, said inner-city flats were still far more expensive than the cost of construction due to restrictive zoning restrictions.
“At Bondi Public School we are seeing enrollments plummeting and parents having to crowdfund an extra teacher to run the enrichment class,” Mr Simon said.
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