The pockets of Sydney and Melbourne where house prices have dropped the most

Prospective home buyers in Australia’s two largest metropolitan cities are able to more quickly save for a deposit on their home loan, and there are a few suburbs in which falling house prices have significantly reduced this duration.    

The latest ANZ CoreLogic Housing Affordability report found that since March the time needed for a median income household to save a 20 percent deposit has fallen by about three months in both Sydney and Melbourne to 13.7 years and 11.1 years respectively.

However, in Sydney’s Manly and Pittwater home values dropped $264,013 and $204,484 respectively in the June quarter of 2022, resulting in a staggering two and a half year reduction in the time it would take to save for a deposit.

In Melbourne, those seeking properties in Darebin South can expect to shave 1.6 years off the time taken to save for a deposit, while those vying for homes in Bayside (1.1 years less) and Boroondara (0.9 years less) are also better off.

The report also revealed that the deposit hurdle in regional Australia has almost caught up with that of capital cities. The deposit-saving period for median income earners in regional Australia reduced by four months to 10.7 years, compared to 11.1 years in capital cities. The metric hasn’t been this narrow since June 2011.

Heaping more positivity on home buyers and loan customers, ANZ senior economist Felicity Emmett expects that mortgage serviceability may improve in 2024.

“We expect the Reserve Bank of Australia to cut the cash rate by 50 basis points by the end of that year,” she said.

So, what’s the downside?

Despite these beneficial circumstances, the report also found that higher living costs, as a result of growing inflation, meant prospective buyers, including renters, may not be able to divert as much of their income towards a deposit.

The Housing Affordability report found that tenants in regional Australia would need to commit a higher portion of their income (34 percent) to service rents on a new lease, compared with those in capital city markets (28.4 percent).

Rents have hiked significantly in the last year, making the current market ideal for landlords. For the almost one-third of Australians who pay rent it may be helpful to explore options to make renting more accessible and affordable.

The report also suggested that the portion of income required to service a new mortgage in Australia jumped to 44 percent in June, up more than 10 percent in less than two years and the highest level on record since June 2011.

The cost of moving to the seaside or making a tree change could cost you over one million dollars in some popular regional areas, according to the latest data release from Domain. As interest rates are expected to continue rising across the country, would-be buyers may be curious to know how much a mortgage could cost in these areas.

There has been much speculation surrounding the Reserve Bank of Australia’s (RBA) recent monetary policy decisions. As we navigate global pressures on our economy, it’s reasonable to inquire where Australia stands and when things will return to normal? But just what is “normal” and what does this mean for the future of the cash rate?

Sharing the burden of home loan costs can expedite the approval process. There are a few different options to consider when deciding who can help you secure the necessary finances to purchase a property.

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