Young Australians on a tight budget who buy a small apartment in a more upmarket postcode instead of a house in a less fashionable area are less likely to get rich.
Before the pandemic, units at Waitara on Sydney‘s upper north shore and houses at Blacktown in the city’s outer west were both selling for less than $540,000 in 2019.
But five years later, Blacktown’s median house price is $970,000 with very few selling for less than $900,000, while one-bedroom units at Waitara are only selling for $535,000, despite being next door to upmarket Wahroonga.
In five years, Blacktown’s median house price has surged by 49.4 per cent while one bedroom units in Waitara are selling for less than they did in 2019.
In 2019, before the pandemic, units at Waitara on Sydney ‘s upper north shore and houses at Blacktown in the city’s outer west were both selling for less than $540,000 (including this house that sold for $535,000 in February 2019)
Young Australians on a tight budget who buy a small apartment in a more upmarket postcode instead of a house in a less fashionable area are less likely to get rich (pictured is a unit that sold for $539,000 in October 2019)
Ray White chief economist Nerida Conisbee said one bedroom units didn’t make as much sense in a family-friendly suburb like Waitara, that is close to several schools.
‘If you’re building a lot of one-bedroom apartments in a family suburb, that would likely make less sense than building apartments that are a bit larger,’ she told Daily Mail Australia.
But Blacktown house prices had also surged following the construction of a new Metro West train line in western Sydney in a suburb that is also close to the M7 and M4 motorways.
‘A lot of it has to do with investment in western Sydney in terms of infrastructure and roads,’ Ms Conisbee said.
‘Sydney is growing so suburbs like Blacktown, five, ten years ago may have been considered a bit far out of town but Sydney’s become bigger, it starts to look a lot more desirable from that perspective.’
In one comparison, a three-bedroom Blacktown house on a 556 square metre block sold for $535,000 in February 2019, which at the time was below the suburb’s median house price of $649,450.
In March 2024, another three bedroom house Blacktown on the same-sized block sold for $967,000, or slightly below the suburb median of $970,030.
In Waitara, an 84 square-metre, one-bedroom apartment sold for $539,000 in October 2019, which was below the suburb’s mid-point unit price of $671,653.
But in April, another one-bedroom unit with 84 square metres of space sold for $535,000, even though the suburb’s median unit price in five years has climbed by 8.7 per cent to $730,012.
In March 2024, a three bedroom house Blacktown on the same-sized block sold for $967,000, or slightly below the suburb median of $970,030
That meant the middle to average-income earners who bought the house instead of the unit benefited from house prices surging in 2021 after the Reserve Bank cut interest rates to a record-low of 0.1 per cent.
Blacktown houses continued to make strong capital gains in 2023 as immigration hit new record highs, but the value of one-bedroom units in Waitara has hardly moved despite Australia suffering from a rental crisis.
Sydney no longer has any suburbs with a median price under $600,000 with Tregear near Mount Druitt having a mid-point of $688,442.
The Central Coast, an hour north of Sydney, has seen a big surge in house price with Woy Woy’s mid-point climbing by 54.5 per cent in five years, to $948,550 up from $613,971.
But there are still outer suburbs of Melbourne and Brisbane that are still affordable for someone on an average, full-time salary of $98,218 who can borrow $511,500 to buy a house worth $639,375, based on RateCity calculations.
Frankston North on Port Phillip Bay has a median house price of $597,429 while Deception Bay in the Moreton Bay area has a mid-point of $644,241.
Deception Bay’s median house price was just $405,532 in March 2019 but it has since surged by 58.9 per cent.
Back in September 2019, a house at Wynnum, a waterside suburb 25km from Brisbane’s city centre sold for $506,000, back when the median price was $659,488.
But since than, Wynnum’s median house price has surged 75.7 per cent to $1.159million.
During that time, Redcliffe’s median house price has soared by 78.1 per cent to $808,433, up $453,871, in the Moreton Bay area.
Frankston North, however, has had more subdued growth of 33.3 per cent, up from $448,142 five years ago, with Melbourne house prices growing at a slower pace than Sydney and Brisbane.
But Ms Conisbee said the fact more people could work from home several days a week made places close to the water a good investment in this part of Melbourne.
In April, a one-bedroom unit at Waitara with 84 square metres of space sold for $535,000
‘Those areas, they are quite far out of town, but Frankston does have good public transport to the city, so that makes it more desirable,’ she said.
‘Close proximity to the Mornington Peninsula, close to beach.
‘We know, long-term, that people have increasingly moved to beachside suburbs, that trend has happened over the last two decades.’
The popularity of beachside living means smaller apartments are mainly likely to go up in value if they are near the ocean.
Manly’s median unit price during the past year has surged by 12.4 per cent to $1.778million people which is beyond the reach of someone earning less than $273,000.
‘It’s not necessarily the case, in every suburb, that you always see houses outperforming apartments,’ she said.