A unit in this Mount Druitt block recently sold for $440,000. Mount Druit is one of the last remaining areas with deals below $500,000.
Sydney’s entry level housing market is collapsing after years of runaway growth in prices, with houses and units listed for under half a million dollars now on the verge of going extinct, new data shows.
The alarming report showed properties priced below $500,000 now account for only 4 per cent of all city listings – a massive departure from the early 2010s when they were the Harbour City norm.
Meanwhile, properties priced above $2m now account for nearly a fifth of all city listings, while listings above $1m make up nearly two thirds of the market.
For some perspective, just 3 per cent of Melbourne listings were above $2m.
Sydney properties priced above $2m outnumbered sub-$500,000 listings by a factor of four to one.
Found It analyst Kent Lardner said opportunities for first-time buyers to land a foot on the first rung of the property ladder were waning.
The bulk of the sub $500,000 listings were concentrated in just five suburbs: Liverpool, Blacktown, Mount Druitt, Fairfield and Merrylands, according to the study by research group FoundIt.
About 14 per cent of Sydney housing stock was priced $500,000-$750,000, most of which was one-bedroom high-rise units in the Parramatta, Bankstown and Liverpool regions.
FoundIt head of research Kent Lardner, a pioneer in the world of financial data, said the bottom rung of what used to be a property “ladder” in Sydney had essentially vanished.
“Once you go below $750,000 your options for housing go off a cliff,” he said.
Mr Lardner said sub-$500k buying in Sydney was overwhelmingly a “distance trade-off”.
“Affordable transactions are concentrated in middle and outer suburban corridors, and almost always involve small apartments or ageing unit stock,” he said.
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A one-bed unit in this Liverpool complex recently sold for $420,000. Liverpool has the lion’s share of Sydney’s last remaining deals for under $500,000.
“Affordability here is paid for in commute time, dwelling quality, or both.”
This shortage of cheaper housing was pushing more people to poorly connected outer suburbs, Mr Lardner said.
“There is a segment of the market that is pursued by buyers only because that’s where they can afford a roof over their head. It’s not where they would choose to live,” he said.
“It’s becoming ‘what can I borrow?’ and that dictates the area they select,” Mr Lardner said, adding that people getting priced out of inner areas would have long-term implications for the economy.
“This will have obvious problems because we will have fewer and fewer people working lower paying service jobs in inner city areas.”
Home buyers told The Sunday Telegraph the lack of affordable options made house hunting difficult.
Dustin Nguyen and Fontins Suardy, with son Oliver at home the Bexley home they are selling at auction on 21 February. Picture: Justin Lloyd
Dustin Nguyen and Fontin Suardy recently bought a new home and are in the process of selling their old house of 20 years on Queen Victoria Rd in Bexley at auction on February 21.
Mr Nguyen said it wasn’t easy to get into the market back in 2006 but was nothing like today. “There is definitely a lot less choice,” he said.
“They also don’t build new houses like they used to. Our Bexley home is solid construction. It’s a great, great house, it’s a lot harder to find that now in a good, convenient location like we’re used to.”
The couple’s agent Trent Tarbey of McGrath-Sans Souci, one of the top agents in the St George region, said the government’s First Home Guarantee Scheme had thinned the supply of cheaper homes.
The scheme allows eligible buyers to purchase with deposits of 5 per cent without needed to pay stamp duty. The Sydney price cap for the scheme is $1.5m.
“Grants and concessions for first-home buyers have created even more demand at the lower end,” Mr Tarbey said.
“Properties under $500,000 are now non-assistant in the area. The cheapest you could get would be a studio for maybe $550,000.
“Entry level for a house would be close to $1.2m, but it would be on a very busy road and probably much older stock … that’s one reason we get a lot of competition. There simply enough housing supply.”
A two-bedroom unit in this Blacktown building recently sold for $430,000.
Mr Lardner said opportunities for buyers to climb the property ladder were diminishing and using a stepping stone property, such as a unit to one day channel into a house purchase, was getting less effective.
“You used to be able to buy a unit and, a few years later, with some equity growth buy a townhouse or a house,” he said.
“That isn’t as much of an option anymore because house prices are growing so much faster than unit prices. You cannot get the unit value growth fast enough to match the rises in house prices.”
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