Australia-wide property prices have been on the rise this year, from the highly publicised runaway prices in Sydney, to the steady growth in Melbourne, the recent boom and apartment sales in Brisbane and the slew of new developments announced for the Gold Coast. Key to this tremendous growth has been the high level of sales to property investors.
While these increasing prices have been welcome news for many sellers, it has had a negative impact on young buyers, who are now being priced out of the market.
This has seen young buyers look to 'middle ring' suburbs, which are those suburbs slightly further out of the city that offer a more attractive price, but are still close enough to commute for work and leisure.
Our conveyancing lawyers found the below article which sheds some more light on the 'middle ring' phenomen.
Young Buyers Flock to Middle-Ring Suburbs:
Young buyers looking to get into the property market are primarily searching for homes in middle-ring suburbs, between 11km and 20km from the city.
Data from realestate.com.au subscribers shows 21% of prospective buyers aged 25-34 want to live within an easy commute of the CBD.
A slightly smaller percentage of the same demographic are extending their search further out, between 21km and 40km of the CBD.
Only 10% of these subscribers are browsing homes to buy within 5km of the city.
Yet those in the same age bracket seeking rental properties are almost twice as likely to be looking at inner-city suburbs.
So, what does this mean? Can young people only afford the inner city as a renter?
Damian Moore, Managing Director of Ray White Glen Waverley says there’s a small percentage of young property seekers who can afford to buy in the inner city. And the rest?
“If they want to live in the inner suburbs, they have no option but to rent.”
He says good capital gain and low vacancy rates makes the inner city the ideal investor’s market.
“The inner city is an investor’s dream. If you have the wages that allow you to purchase in the inner suburbs, then capital gain is great,” he says.
“Landlords that own properties in the inner suburbs would be very pleased about the capital growth they’ve achieved recently. Equally, they’d be pleased at the low vacancy rates.”
Young renters may be the ones filling those vacancies, attracted by employment opportunities and a wider range of lifestyle facilities centered around the CBD.
“The reality is that the inner suburbs are always going to be very desirable places to live.”
Ray White Glen Waverley is one of the major operators in the City of Monash area southeast of Melbourne, which includes suburbs 18-25km from the CBD like Glen Waverley, Chadstone and Wheelers Hill.
He says most of his buyers are actually families where the parents are in their early 30s to 50s.
“All of Melbourne has had a significant price increase.
“Glen Waverley is 18km from the city. Younger buyers are now being pushed out further.”
Brandon Church, Director of RT Edgar in the Monash area, says it’s a “fair comment” that the inner city is more affordable to rent for most young people.
But he disagrees that necessity is pushing those who want to buy further out.
The middle-ring suburbs offer younger buyers – particularly families – convenience, shopping, amenity and better school networks, he says.
“With Glen Waverley, it’s the central shopping centre, The Glen, the aquatic centre and Jells Park, attracting young buyers to the suburb.”
A different set of values is attracting young renters to the inner city.
Craig Stephens, Principal of Jas Stephens based in Melbourne’s Yarraville, says people in the inner-west love the fact that you’ve got your own restaurants, bars and cafes.
“They like the fact that it’s a bit more grungy, and of course, being close to the city.
“A lot of people that live in the inner-west actually ride to work in the CBD and Docklands. Renters like suburbs that are close to the city.”
He adds that renters who like the area, will often become buyers in the peripheral suburbs.
“A lot of people are renting first, buying second. You might have someone renting in Yarraville, but buying in Sunshine, just beyond the inner ring.
“We’re doing more business in Sunshine than ever before.”
Article written by Alice Bradley and originally published on realestate.com.au.