Homes under $500,000 in Sydney are disappearing, new data shows – realestate.com.au

Sydney’s entry-level housing market is collapsing after years of runaway price increases, with homes and units for sale for less than half a million dollars now on the verge of extinction, new data shows.

The alarming report found that properties priced under $500,000 now make up just 4 percent of all city listings – a huge departure from the early 2010s, when they were the port city norm.

Meanwhile, properties priced above $2 million now account for almost a fifth of all city listings, while listings above $1 million make up almost two-thirds of the market.

From one perspective, only 3 percent of listings in Melbourne exceeded $2 million.

Sydney properties priced above $2 million outnumbered those under $500,000 by a factor of four to one.

Found It analyst Kent Lardner said opportunities for first-time buyers on the property ladder are declining.

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The bulk of listings under $500,000 were concentrated in just five suburbs: Liverpool, Blacktown, Mount Druitt, Fairfield and Merrylands, according to the research from research group FoundIt.

About 14 per cent of Sydney’s housing stock was priced from $500,000 – $750,000, most of which were 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 was once a property ladder in Sydney has essentially disappeared.

“Once you get below $750,000, your housing options start to skyrocket,” he said.

Mr Lardner said purchases under $500,000 in Sydney were overwhelmingly a “remote trade-off”.

“Affordable transactions are concentrated in the mid- and suburban corridors, and almost always involve small apartments or outdated units,” he said.

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A one-bed unit in this Liverpool complex recently sold for $420,000. Liverpool have the lion’s share of Sydney’s last remaining deals for under $500,000.

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“Affordability here is paid for in travel time, the quality of the home, or both.”

This shortage of cheaper housing pushed more people into poorly connected suburbs, Lardner said.

“There is a segment of the market that buyers are only pursuing because they can afford a roof over their heads there. It’s not where they would want to live,” he said.

“It’s becoming more and more ‘what can I borrow?’ and that determines which area they select,” Lardner said, adding that people being priced out of inner areas would have long-term consequences for the economy.

“This will pose obvious problems as there will be fewer and fewer people working in lower-paid service jobs in the inner cities.”

Homebuyers told The Sunday Telegraph that the lack of affordable options was making house hunting difficult.

Dustin Nguyen and Fontins Suardy, with son Oliver in the Bexley home they are selling at auction on February 21. Photo: Justin Lloyd

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Dustin Nguyen and Fontin Suardy recently purchased a new home and are in the process of selling their old home of 20 years on Queen Victoria Rd in Bexley at an auction on February 21.

Mr. Nguyen said it wasn’t easy to get into the market in 2006, but it was nothing like today. “There is definitely a lot less choice,” he says.

“They also don’t build new houses like they used to. Our house in Bexley is solidly built. 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 a 5 percent deposit without having to pay stamp duty. The price ceiling for the Sydney scheme is $1.5 million.

“Subsidies and concessions for first-home buyers have created even more demand at the bottom end,” Tarbey said.

“Properties under $500,000 are not available in the area now. The cheapest you can get is a studio for maybe $550,000.

“The entry level for a house would be close to $1.2 million, but it would be on a very busy road and probably on much older stock… that’s one of the reasons we have a lot of competition. There’s simply enough housing supply.”

A two-bedroom apartment in this Blacktown building recently sold for $430,000.

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Mr Lardner said the opportunities for buyers to climb the property ladder were shrinking and the use of a stepping stone, such as a unit to buy a house one day, was becoming less effective.

“It used to be that you could buy an apartment and a few years later, with some equity growth, buy a townhouse or a house,” he said.

“That’s not much of an option anymore because house prices are growing so much faster than unit prices. You can’t get unit value growth fast enough to match house price increases.”

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