Surprises are in store for Affordable and Liveable property!

The PRD Affordable and Liveable Property Guides 2nd Half 2018 have just been released for Sydney, Melbourne, Brisbane, and Hobart. The reports provide valuable insight and highlights for the market, reporting on many key indicators, creating a holistic picture of property conditions in each capital city. 

There were several surprises in the 2nd half of 2018 report, including: 

1. All affordable and liveable suburbs were in the north of Brisbane. This was different to previous reports, where affordable and liveable house hotspots were found in all pockets of Brisbane (i.e. north, south, east, etc.). 
   
2. For the first time since 2015, all the affordable and liveable suburbs in Sydney had negative annual median price growth, a sign of market cooling. Prior to this, affordable and liveable suburbs showcased positive growth, thus, in this report, it became a task of nominating suburbs with as moderate a softening as possible. 
   
3. None of the affordable suburbs in Hobart were able to satisfy the liveability criteria. To ensure liveability aspects were met, the median suburb price had to be raised above that of the Hobart metro median price. This only occurred in Hobart, which suggests the strong need to develop a strategy that addresses liveability aspects in more affordable areas of Hobart. 
   
4. For the first time since 2016, the first and lowest price band of $0-$500,000 has opened to Sydney buyers, at 1.4% of the market. Although this is a very marginal part of the market, this marks a more affordable Sydney. 
   
5. Of all the capital cities, Melbourne has proven to be the most resilient market, both in terms of price growth (in comparison to Sydney) and in ease of satisfying liveability aspects in its more affordable suburbs. 
   

Affordable & Liveable Suburbs

Table 1 Illustrates liveability costs between the capital cities, with Hobart proving to have the highest average liveability cost at 12%, and Sydney and Brisbane taking out the title for most liveable cities with an average liveability cost of 3%. 

It is important to note that these premium percentages are affected by median price movements in the market, and that unit markets in Sydney, Melbourne, and Brisbane have experienced an annual softening. If only based on house premium percentage, Melbourne becomes the most expensive city to live in, followed by Hobart. This is quite surprising as for several years Melbourne has been nominated as one of the most liveable cities in the world. 

First home buyer activity continues to be a focal point in the 2018 property market. Table 2 confirms declining affordability over the past 12 months, particularly in Melbourne and Hobart, with drastic reductions in access to the first and lowest price band within each market. In Melbourne, access to the under $500K market shrunk significantly from 11.2% to 1.4%, whereas in Hobart access to the under $350K market declined from 28.6% to 8.2% in the 1st half of 2018.

Interestingly, Brisbane and Sydney have come out as the beacons of hope for those looking for affordability, with access to the less than $500K price bracket increasing. For Brisbane, this increased from 10.6% in the 2nd half of 2017 to 12.4% in the 2nd half of 2018. The 2nd half of 2018 marks a momentous occasion for Sydney, as for the first time since 2016 buyers will be able to access the less than $500K market, albeit at the smallest percentage across capital cities at 1.4%.

The premium market, above the $2M price tag, has decreased in sales activity in Brisbane Sydney and Melbourne, with the price bracket completely vanishing in Brisbane. Interestingly the highest premium market for Hobart, $800K+, has tripled from 3.6% to 10.2% over the past 12 months. This suggests that there may be a concentrated shift in buyer activities across capital cities, creating more affordability in Brisbane, Sydney and Melbourne, and causing price hikes in Hobart. Although this has been an occurring pattern over the past 12 months now we are seeing the definite results of this activity. Hobart is the only capital city in which the percentage premium added to its affordable and liveable suburbs had to be above what was added to reach the Hobart median price, thus, now is the time to strategically re-think development in Hobart and its surrounding areas.

Read more: https://www.prd.com.au/research-hub/article/affordable-liveable-property-guide-2nd-half-2018/