Let’s face it, when we’re buying our first home, most of us set our sights on properties on the CBD’s doorstep.
But with skyrocketing demand for inner-city properties, it has never been harder for first home buyers to break into these much sought-after areas.
Don’t despair. With some savvy research and smart buying, you can land that dream inner-city property.
HomeStart Finance consulted the experts – an Adelaide mortgage broker and real estate agent – to get their advice on Adelaide’s up and coming postcodes.
Within 8kms from the CBD
Director and Auctioneer at Klemich Real Estate, Matt Smith, said high demand for properties in a five kilometre radius of the CBD had made many of them an unaffordable level for many first home buyers.
“These suburbs are now hot property,” he said. “As an example, Plympton has experienced 6.2% capital growth in the past year and boasts a remarkable median price of $575,000.
“Furthermore, median house prices in these suburbs are tipped to grow by 4-6% in 2017.”
Despite this, Matt said first home buyers can find hidden gems within the 5-8km zone from the city, including Flinders Park in the west and Enfield in the north.
“Homes can sell for around land value in these suburbs,” he said. “These homes can be renovated and improved and later on sold for a profit without incurring a taxation penalty. “Alternatively, first home buyers can live in the homes for a few years before demolishing it and building a new dwelling on the site.
“These older suburbs offer established facilities and amenities such as local schools, hospitals, transport and shopping.” Mortgage broker at Rise High Financial Solutions, Thuy Nguyen, said Devon Park, Renown Park and Ridleyton are ideal suburbs to the north of Adelaide’s CBD.
“The median house price in Devon Park is $480,000, so it’s within the price range of first-timers,” Thuy said.
“For the west I would recommend buyers look at Beverley, six kilometres from Adelaide’s CBD, with a median house price of $470,000. Thebarton with a median house price of $491,000 is also an up and coming suburb, along with Hindmarsh, which has a median house price of about $328,000 – making it very affordable.”
Casting the net wider
Broadening your search outside the eight kilometre CBD radius opens up a greater range of home buying options, particularly in the northern and southern suburbs that aren’t limited by the hills or sea.
Thuy said suburbs in Adelaide’s north such as Mawson Lakes, Craigmore, Elizabeth and Salisbury are popular if the income of first home buyers doesn’t allow them to buy into the suburbs within the 5-8km zone.
“I am seeing a lot of people buying in Elizabeth and Salisbury under Affordable Homes,” she said.
“Affordable Homes is a government initiative where the homes for sale are previous community housing properties. The properties enter the market under market value and only first home buyers can purchase them.”
To the south, Thuy said first home buyers are looking at suburbs such as Darlington, Seacombe Heights, Bedford Park and Christies Beach.
“A plus for the southern suburbs is that the Southern Expressway means the city isn’t that far away at all,” she said. “There is a fair bit of movement in Christies Beach at the moment, with modern and affordable townhouses being built, along with new cafes opening,” she said.
“There has been a definite move away from the days when people only wanted to live near the city. People are moving further out because infrastructure is improving and shopping hubs have been created in the suburbs – meaning you don’t need to go to the city as much. “
Adelaide’s newest suburb
Adelaide’s newest suburb known as Tonsley, which is situated where Mitsubishi once manufactured motor vehicles, will be in very high demand by new home buyers from this year forward, Matt said.
“New land releases in metropolitan Adelaide are rare. The Clipsal site in Bowden which was released to the market place about a decade ago is the template for what can be expected at Tonsley, with the exception, that it will be more affordable for first home buyers.
“Adelaide’s newest suburb will offer easy access to Westfield Marion Shopping Centre, Flinders University and Hospital and easy access to the city via South Road.”
Matt said many first home buyers prefer purchasing new homes so that they can live in a modern home and enjoy the financial benefits offered by the South Australian Government, with the $15,000 first home buyers grant available for new homes.
“Hot spots include Bluestone in Mt Barker - Adelaide Hills, St Clair in Woodville - Adelaide’s north-west, Lightsview in Northgate – Adelaide’s north-east and Mawson Lakes - about 14km north from the Adelaide CBD,” he said.
“The array of quality homes or apartments built in these suburbs are affordable to first home buyers. These suburbs are well planned and often include extensive parkland and man-made lakes. They offer a sense of community for first home buyers.”
Thuy said she has seen a lot of first home buyers move towards purchasing house and land packages, or new homes.
“When you build you only pay the stamp duty on the land and not the house, this helps first home buyers to enter the housing market sooner because they don’t need to save up as much for the upfront costs.
“They also have access to the $15,000 grant to boost their deposit. In my experience it’s the deposit that first time buyers find the most challenging to save for.
“South Australians are in a very unique position due to HomeStart offering low deposit loans, meaning first time buyers can break into the property market sooner due to the lower upfront costs.”
Take home message to first home buyers
Matt - While first home buyers have enjoyed record low interest rates for many years, economists are forecasting interest rate rises later this year. Rate rises are foreign to home owners who have entered the housing market in the last decade. It’s important that first home buyers do not over-extend themselves financially – rates will rise and they will continue to rise as the economy strengthens. First home buyers should factor in a ‘buffer’ to their lending and proceed with caution.
Thuy – Buy what you can afford and look at your first property as a stepping stone to buying the home of their dreams later on.