From 51 suburbs in 2000 to four in 2016: The last areas Sydney first-home buyers can afford

House prices have risen so fast in Sydney that just four suburbs are still within reach for first-home buyers. Not surprisingly, they are all more than 45 kilometres away from the CBD.

Just a small cluster of suburbs in Sydney’s west – Willmot, Tregear, Emerton and Lethbridge Park – had a median price that was on par with the typical amount spent on a property by first-home buyers.

In 2000, there were 51 suburbs with a median price that matched what first-home buyers were spending, including a swathe of choices in the west and south-west.

To calculate a likely price paid by first-time buyers, Domain analysed the Australian Bureau of Statistics’ NSW first-home buyer loan data, adding a deposit of 20 per cent, and then compared it to Sydney-wide prices.

This revealed a “nightmare” scenario for those who were yet to own property, Domain Group chief economist Andrew Wilson said.

“There are fewer first-home buyers and on every measure they’re struggling. We’d need catastrophic falls up to 20 per cent to put Sydney prices back into first-home buyer range, and it’s just not going to happen.”

On this measure, there is now a record gap between the first-home buyer price, $466,353, and Sydney’s median house price, now $1.1 million.

But even in the small enclave where first-home buyers can still afford to get into the market, the prices are rising and young buyers are missing out, Raine & Horne St Marys sales agent Peter Diamantidis said.

“It’s all selling to investors and all within a week of going on the market,” Mr Diamantidis said.

“Prices have definitely increased, [similar homes] selling at the end of last year for $450,000 are now selling for $465,000.”

There are up to 30 people at each open home and agents have seen it turn into a “bidding war” as investors look to buy in – attracted by the comparatively lower prices and the ability to add a granny flat for additional rental income.

Mr Diamantidis sold a three-bedroom home on Luxford Road, Emerton, in October 2016 for $440,000, marketed as the “ideal first home or investment”. It last sold in 2007 for $217,000.

The rise of investors in Sydney, from 20 per cent of the market in 2000 to about 50 per cent in 2016, had changed the dynamic of entry-level suburbs, Starr Partners chief executive Doug Driscoll said.

“The stark reality now is that detached homes are reserved for only a fortunate few and more first-home buyers are being forced into units whether they want them or not,” Mr Driscoll said.

Despite this, he said those who could buy into the Blacktown LGA would find it “very good value for money” but agreed first-home buyers would be coming up against investors who made up the majority of the market.

“If you’re looking at smaller more affordable dwellings, it’s about 80 per cent investors and 20 per cent first home buyers,” he said.

And these areas, around Blacktown, St. Marys and Fairfield, were once considered “areas to avoid” by investors, co-founder of lobby group First Home Buyers Australia, Taj Singh, said.

“The fact that this has changed in the space of five or so years shows the devastating impact the strong demand for Sydney property by investors has had on a first home buyers ability to purchase a home.”

The same analysis applied to Brisbane found 65 suburbs where first-home buyers could purchase and seven in Melbourne.