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Buy at the bottom Part 2: Best deals between $300-$500k

By MoneyQuest
In First Home Buyer, Home Loans, Investment

The best buys within the range of $300,000 and $500,000 reveal some interesting things about where the market might be going.

These are within areas that appeal to families that want to expand to larger blocks of land, while still being close to their city centre and work.

Another prominent feature of these suburbs is they are showing great affordability compared to the surrounds. This points to the possibility of a surge in demand as buyers learn of cheaper alternatives which offer the same amenities and facilities.

NEW SOUTH WALES

Newtown (units)

Median price: $417,000 Average discount:  4%

Kickers:       

  • 2km from city CBD
  • Low supply
  • Strong demand relative to supply
  • Huge jump in rent
  • Strong yields

Signs of bottoming out:  Like many Sydney suburbs, Newtown’s unit price has also slowed during 2010 and 2011, but it appears that buyers are now back in a big way. During the 3 months ending November, the number of sales rose by 8%, pushing median price to $417,000 according to RP Data. Another sign of rising demand is the improving yield, thanks to rising rents. During the past 12 months, rents jumped $80 per week or up 19% compared to a year ago.  Properties are selling within a month of listing on average, which indicates demand continues to remain hot in the area.

Newtown’s location 2km from Sydney’s central station and 1km from the University of Sydney is also one that would be hard for investors to beat.

Best street(s): Bargain hunters can fine cheaper homes are found along Susan St, Probert St and Alice Lane

Kings Park (houses)

Median price:  $428,750 Average discount: 6%

Kickers:   

  • Desirable areas for families
  • Excellent public transport and road links through M7
  • Low supply relative to demand
  • Affordable
  • Rising rents

Signs of bottoming out:  House prices have started to recover during the past couple of months, rising by 1% over the 3 months ending November according to RP Data. The number of properties sold rose 7% compared to the previous quarter. The number of potential buyers has more than doubled during the past two months – 44 potential buyers for every listed home according to realestate.com.au. Median rents have also increased solidly – $40 a week higher than a year ago according to Residex. Gross rental yield is currently sitting at 5.33% as vacancy rate drops to 1.22%.

Kings Park is one of the smaller suburbs within the Blacktown area, and is one of Western Sydney’s best served suburbs for transport. Nearby suburb Kings Langley is much larger, but with an average asking price of about $120,000 more.

Best street(s): Best bargains can be found along Bowmans Road, Elliott Street, Harvey Road and Stutt Street.

VICTORIA

Upwey (houses)

Median price: $ 422,500 Average discount: 6%

Kickers:        

  • Sought-after suburb for families
  • Large, affordable houses
  • Good transport links to city
  • Rising sales
  • Low rental vacancy
  • Strong demand relative to supply

Signs of bottoming out: Buying activity has been robust during the three months to December with the number of sales nearly doubling the volume sold during the same period last year. House prices appear to be recovering as well, adding 8% during the past 12 months. Demand continued to strengthen as shown by the high clearance rate and the large number of people looking to buy in the area. According to realestate.com.au, the number of potential buyers has more than doubled since November -70 people for every available property. And the number of available stock has fallen by 20% during the same period. Landlords are also poised to see rental increases as vacancy drops to virtually zero.

Upwey might be one of Melbourne’s best kept secrets. Situated at the foot of the Dandenong Ranges, some 30km south-east of the CBD, the area is home to an eclectic mix of cheaper and more expensive houses.

Best street(s): Pockets off Morris Street in the southern part of the suburb normally have better views and get more sun. Wright St offers some of the cheapest homes in the suburb.

Upper Ferntree Gully (houses)

Median price: $410,000 Average discount: 7%

Kickers:       

  • Desirable, tightly held suburb
  • Train and rail links to the city
  • Large, affordable blocks
  • Strong demand
  • Low housing supply

Signs of bottoming out: Median price has trended down much of 2011. However, there are signs that prices are stabilising. During the past 12 months ending November, median house price rose 1%. Over the past 3 years, it has grown by a mere 13% in total, well below the 10% average annual growth it recorded over the past 10 years, which indicates that strong growth is well overdue. The number of sales has also started rising – up by a third, compared to the same period last year. The number of people looking to buy more than doubled since November – that’s 90 people for every available house according to realestate.com.au. This comes as the number of listings falls.

Upper Ferntree Gully offers what few Melbourne suburbs can at affordable prices: great lifestyle choices. It is a roughly 50 minute drive or an hour’s train ride to the heart of the CBD, but has surroundings that closer resemble the countryside. The area is well served by hospitals and sports facilities, with other amenities such as schools and shopping complexes in nearby suburbs.

Best street(s):  The most expensive homes seem to cluster around Rose and Hughes St. Cheaper homes are generally found along Quarry Road and Railway Avenue.

AUSTRALIAN CAPITAL TERRITORY

Charwood (houses)

Median price: $383,000 Average discount: 7%

Kickers:                             

  • Affordability
  • Low supply
  • Low vacancy rate
  • High yield
  • Rising rents

Signs of bottoming out: The housing market appears to be bouncing along the bottom with prices stuck around the $380k–$390k range. However, market activity is ramping up with buyers snapping up higher priced properties and pushing the number of sales to 56 houses over the past 12 months.

The turnover time is relatively short at just over two months. Demand appears to outstrip supply as shown by high clearance rates and the low level of stock up for grabs. According to DSRscore.com.au, only 0.9% of the total properties in the market are available for sale. The rental market is just as tight with the vacancy rate sitting at 0.67%. Investors are now getting an extra $20 a week rent on average compared to a year ago.

No longer a fringe suburb of Canberra, Charnwood is emerging as a cheap and popular alternative to nearby Dunlop, where properties often sell for more than $100,000 higher. The area’s relative affordability could spur buyers, driving up prices. It offers much of what Dunlop offers too: large block sizes, set upon hilly streets with great views of Canberra.

Best street(s):  The most expensive homes are found around Arrietta Cl and Barns Place while Bloxham St and Weaver Pl boast some of the cheapest in the suburb.

Spence (Houses)

Median price: $480,000 Average discount: 4%

Kickers:                             

  • Sought after, tightly held suburb
  • Accessibility
  • Large block sizes
  • Strong demand relative to supply
  • Low rental vacancy rate
  • Strong yield

Signs of bottoming out: The level of stock in the market has been steadily falling since November and is currently sitting at just 0.33% of the total properties in the suburb, which is a reflection of the suburb’s tightly-held status. There is also a low level of discounting, which suggests that vendors are not under pressure to lower their asking price – also an indication that confidence is returning in the market. Turnover is pretty fast with houses selling within two months of listing.

Median rents are rising strongly too. Landlords are now getting an extra $70 per week on average, pushing rental yield to around 5%.

Best street(s):  Some of the lowest priced houses are located along Hancock St, Kelsall Place, Bowling and Toomey Place.

WESTERN AUSTRALIA

Warnbro (Houses)

Median price: $330,000 Average discount: 9%

Kickers:                             

  • Employment opportunities
  • 30 minutes to Perth CBD
  • Affordable
  • Rising rents
  • Falling stock

Signs of bottoming out: The housing market appears to be stabilising after dropping in 2011. During the three months ending November, the rate of fall has slowed 1% amid confidence returning to the Perth market. The number of days on the market has also shrunk to 100 from 104 in the previous quarter. The number of people looking to buy in the suburb nearly doubled during the last two months, according to realestate.com.au. At the same time, the level of properties listed for sale has steadily declined – down 29% over the past three months. Rents are trending up as well – up $20 per week compared to a year ago.

Warnbro is one of the few Perth suburbs where it is still possible to get an ocean-side house for around $300,000. This, coupled with its easy access to the CBD, good schools, roads and other amenities, should see demand pick up.

Best street(s): Cannes Place: a quiet cul de sac close to the beach and train station.

Queens Park (Houses)

Median price: $405,000 Average discount: 5%

Kickers:                             

  • Proximity to Perth CBD
  • Subdivision and redevelopment potential
  • Well served by public and private schools
  • Low supply relative to demand
  • Low vacancy rate
  • Rising rent

Signs of bottoming out: Prices appear to be stabilising with the November RP Data figures showing just a slight dip in house prices in the suburb. The recent sales also showed buyers are now targeting higher-priced homes (high $400,000s) which will likely lift the median higher in the near term. Rental demand continues to strengthen as reflected by the low vacancy rate of just 0.5% and rising rents. Landlords are now getting $10 more each week on average compared to a year ago or a gross rental yield of around 6%. The level of buyer interest based on internet searches rose 33% during the past three months, according to realestate.com.au.

Best street(s):  Bargain hunters can find some of the cheapest properties along Reginald St, Dora St or Whitlock Road, while the more expensive houses are located along Treasure Road and Dowley Ct.

SOUTH AUSTRALIA

Bellevue Heights (Houses)

Median price: $482,500 Average discount: 7%

Kickers:

  • Desirable suburb
  • Proximity to Adelaide CBD
  • Rising sales
  • Rising rents

Signs of bottoming out: House prices are starting to recover and showing signs of sustained upturn based on the latest stats from RP Data. In the November quarter, median house price rose 3% and gained 6% during the year. The suburb has been recording a long-term average annual growth of 10%. However, the last three years has seen prices stagnate, which indicates the suburb is overdue for a rebound. Total sales went up by 15% during the three months ending November compared to the previous quarter.

Demand is surging with realestate.com.au recording 104 people looking for every available property in the suburb during February – that’s more than double the number recorded in the previous month. The number of properties up for sale has also steadily fallen to 14 during the past three months.

Houses are selling less than two months of listing. Vacancy is virtually non-existent in the suburb, helping push median rent up by $60 a week compared to a year ago.

Best street(s): The cheapest houses are located along Eden Avenue, Alpha Road and Shepherds Hill Road while the more expensive properties cluster along Flinders Road, Federation Ct and Eve Road.

NORTHERN TERRITORY

Roseberry (Units)

Median price: $390,000 Average discount: 7%

Kickers:

  • Affordability
  • Good transport links
  • High yield

Signs of bottoming out: Prices appear to be emerging from the bottom after recording some price falls during the past 12 months. During the November quarter, median unit price rose 3% as market activity ramped up. The number of buyers has more than doubled during the last two months – 24 people for every listed property, according to realestate.com.au.

At the same time, the stock on market has fallen by 20%, which suggests demand is outstripping supply in a big way.

Rosebery remains one of the most popular suburbs of Palmerston, a satellite city of Darwin. Palmerston itself is the fastest growing city in the Territory, having once been the fastest growing city in Australia.

Best street(s): Granites Drive, Yirra Crescent and Odegaard Drive appear to offer some of the best value homes in the suburb.

QUEENSLAND

Keperra (Houses)

Median price: $431,000 Average discount: 6%

Kickers:

  • Proximity to Brisbane CBD
  • Well served by trains, buses
  • Renovations opportunities
  • Affordable for location
  • Good schools
  • Leafy suburb

Signs of bottoming out: The last time median house prices achieved double-digit growth was in 2008 when it surged 10%. Since then growth has been modest and even recorded negative growth during 2011. There are now signs that prices are about to take off in the suburb.

The number of buyers looking for property has more than doubled since November, according to realestate.com.au. For every available property, there are 42 potential buyers. The level of stock available for sale remains low at just 0.85% of the total properties in the suburb. The number of properties up for sale has been steadily falling since July last year, according to realestate.com.au.

Vacancy rate at 1.63% shows a tight rental market reflected by the rising rent – $10 higher a week compared to a year ago.

Best street(s):  Cheaper houses have been found around Crampton St, Dash St and Kane St.

Gracemere (Houses)

Median price: $335,000 Average discount: 8%

Kickers:

  • More affordable than Gladstone, Mackay
  • Two-hour drive to mining areas
  • 40-minute drive to beach
  • Healthy rental market
  • Three schools in the area

Signs of bottoming out: Total sales rose 11% in the three months ending November, pushing median price up 1% in the same quarter and 2% for the year, according to RP Data.

The number of people looking to buy nearly doubled since November as the stock on market stabilises, according to realestate.com.au.

Best street(s): Some of the best value homes are located along Lamb Avenue, Kate St and Ingram Dr.

TASMANIA

South Hobart (Houses)

Median price: $443,500 Average discount: 5%

Kickers:

  • Proximity to Hobart CBD
  • Affordable
  • Leverages off demand in nearby suburbs
  • Strong demand
  • Relatively low supply vs demand

Signs of bottoming out: A recovery could be well underway with the November RP Data figure showing a 9% growth in the median for the year. Demand continues to rise with realestate.com.au recording a two-fold increase in the number of people looking to buy in the suburb now sitting at 49 for every listed property. The clearance rate is high at 83% as stock stabilises at around 50.

Best steet(s): Bargain hunters can find some of the cheapest houses along Livingston St, Smithurst Ave and Milles St.

North Hobart (Houses)

Median price: $407,500 Average discount: 7%

Kickers:

  • Proximity to Hobart centre
  • Desirability

Signs of bottoming out: The number of potential buyers rose 89% to 60 people for every listed property since November, according to realestate.com.au. The number of stock on market rose slightly, from 20 to 25 but it’s hardly enough to meet demand. Sales have gone up 17% during the three months ending November, according to RP Data. The level of discounting also fell slightly, down 1% during the same period.

Best street(s): Any of the quieter streets off  Argyle or Elizabeth Streets.

To discuss this article or anything to do with your finances, please call our office today and we will be happy to assist you.

MoneyQuest
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