April 20, 2015
FIRST-home hotspots are moving out as rising prices push buyers into the next ring of suburbs.
State Revenue Office figures show buyers looking to get their foot on the property ladder with an established home are turning to suburbs such as Reservoir, Croydon and Fountain Gate.
Reservoir, just 12km from the CBD, is almost $150,000 cheaper than neighbouring Preston and even more affordable than Northcote or Thornbury.
Barry Plant Group chief executive Mike McCarthy said between $400,000 and $500,000 was a popular price range for first-home buyers in the Reservoir area.
“A lot actually grew up out in that area, or their parents or grandparents lived there, so they’re familiar with the area,” Mr McCarthy said.
“It’s slowly becoming gentrified. A lot of 28 to 35-year-olds are moving in as they just can’t afford Northcote or Thornbury.”
That change is also impacting the housing mix in Reservoir.
“They’re really starting up the dual occupancy situation, where they’ve got a townhouse at the back or they knock down and rebuild two townhouses,” Mr McCarthy said.
It’s a similar situation in Croydon, where the median house price of $520,000 is relatively affordable compared to some neighbouring areas.
“First-home buyers are being pushed out from Ringwood and Heathmont since EastLink went through a few years ago,” he said.
“Both of those areas have really increased in value and a lot of them have been priced out, so they’re heading to Croydon, which is only five to 10 minutes from EastLink.”
The State Revenue Office figures show suburbs in Melbourne’s growth corridors remain the most popular with first-home buyers who can pocket a $10,000 grant when buying a new, rather than an established, home.
Hoppers Crossing, Tarneit and Truganina head the list, with more first-home owner grants and stamp duty concessions paid than for any other suburb across Melbourne.
The growth suburbs of Cranbourne, Point Cook, Craigieburn, Pakenham, Doreen and Caroline Springs also make the top 10.
While many first-home buyers are looking further afield, others are downsizing their expectations in order to buy in the suburb they want to live.
Jonathan Lee is a Mortgage Choice franchise owner in Melbourne’s inner west, where he said most first-home buyers opted for a townhouse or apartment.
“They’re still in the suburbs where they want to live but as much as they might want to have a house, a house is going to be $800,000, which doesn’t fit their budget,” he said.
Mr Lee said townhouses could cost $300,000 to $400,000 and buyers could get the $10,000 first-home owners grant if buying off the plan.
Martin’s stamping ground
STAMP duty savings for first-home buyers persuaded Martin Gadsden to buy his Hoppers Crossing house.
The 32-year-old change manager had been weighing up buying an investment property interstate but was swayed by the 50 per cent stamp duty concession for first-time buyers in Victoria.
“That certainly was a factor for me because the purchase prices were looking about the same,” he said.
Mr Gadsden bought his three-bedroom house in the low-$300,000s price bracket.
“I had been renting in the area before, so it’s an area I knew and was comfortable living in,” he said.
“It’s also about affordability. Not so much about what I could afford but more so about what I was willing to pay.
“I still wanted to have an amount of disposable income that I wanted to keep. I didn’t want to be at the maximum of my borrowing power.” He said the house, built in the 1990s, needed some work but he was looking for something he could make his own and adjust as his needs changed.