The Sydney suburbs where homebuyers are seeing fair value

“The huge price mismatch for houses shows that there are still affordability pressures,” Domain chief of research and economics Nicola Powell told The Australian Financial Review.

“While there is softening start to happen, there still isn’t falling prices in Sydney, so it’s unclear if there will be more regions where there isn’t a mismatch.”

Warringah, which covers suburbs such as Freshwater and Dee Why in Sydney’s northern beaches, had a median house listing price of $2.4 million which was $100,000 less than the median search price of $2.5 million.

Blacktown had the best perceived house values in percentage terms among prospective buyers, with the median search price for the region being $1.1 million, which was 9.1 per cent higher than the median listing price of $1 million.

Ms Powell said houses in Warringah were considered “fair value” due to home buyers looking at them after being priced out of the bluest of blue-ribbon suburbs.

“Buyers being more realistic on the price point in those particular areas could be a ripple effect of when buyers are priced out of one particular region and then look further afield,” Ms Powell said.

“Warringah, for example, is an area where people are priced out of the North Sydney and Mosman location so they look towards something that is slightly cheaper even though it might have an overall high price point relative to the rest of Sydney.”

The lack of affordability for the majority of Sydney painted a dire outlook, especially given the number of searches for houses exceeded the combined searches of townhouses and units by threefold in Sydney, and four-fold nationally.

Housing affordability was better for those searching for townhouses and units, with median listing prices and search prices being the same or lower once home buyers searched at a distance from the CBD.

For townhouses, that equilibrium point where search and listing prices were the same started at about 20 kilometres from the CBD. The median listing price for townhouses located between 20 kilometres and 30 kilometres from the CBD was $890,000, $10,000 lower than the search price. Suburbs that fell into this criteria included Western Sydney’s Granville, Punchbowl and Yagoona.

For units, that equilibrium point was suburbs about 10 kilometres from the CBD, such as the inner-west’s Ashfield and lower north shore’s Gladesville, where the median apartment listed was priced at $700,000, which was $50,000 below the median search price.

What buyers are searching for

Domain search data also indicated what type of properties were coveted among buyers. The proportion of house searches compared to unit searches also increased whenever buyers searched further away from the CBD, while the proportion of searches for townhouses remained similar irrespective of distance from the CBD.

AMP chief economist Shane Oliver said this indicated people were happy to compromise on their house ownership dreams by buying a townhouse instead, but were less likely to do the same with an apartment.

“People are happy to accept townhouses as an alternative to houses, but they’re not happy to live in an apartment. The issue is most apartments have two bedrooms which is too small for families,” he said.

“People would be more open to units if they had three bedrooms. But there aren’t many of them.”

Mr Oliver said the consistent demand for townhouses across Sydney meant there was a need for more townhouses and three-bedroom apartments to be built at infill development sites.

The data also showed home buyers predominantly want a study whenever they searched for a home within 15 kilometres of the Sydney CBD.