The suburbs where you can get on the property ladder quickly, using only a 5 per cent deposit

The federal government’s budget delivered good news this week to all the aspiring homeowners who watched as house prices rose at record rates last year and wondered how they could ever possibly save enough for a deposit to crack the market.

The government is expanding its scheme that allows first-home buyers to purchase a property without having to save a 20 per cent deposit or take out lender’s mortgage insurance.

The idea is it gets you into the property market sooner because the deposit you need to save is only 5 per cent, rather than 20 per cent.

Domain’s recently released First Home Buyer Report found the time it takes a young couple to save a 20 per cent deposit for an entry-level house has blown out to record levels across the nation – it now takes, on average, five years and eight months to save for a house in a capital city.

Using the government’s First Home Loan Deposit Scheme, now rebranded as the Home Guarantee Scheme, young buyers can slash the time it takes to save for a house in a capital city to just one year and one month.

But the Home Guarantee scheme has its limitations.

Single applicants can only have earned a taxable income of up to $125,000 per annum for the previous financial year, and couples only up to $200,000. You also have to be buying a home to live in, not an investment property.

Perhaps the biggest limitation is the price caps, which dictate how much you can spend on your property in order to qualify for the scheme. The price caps vary depending on the city or regional area you’re buying in, and also whether you’re buying a brand new property or existing property.

The price caps also vary from capital city to capital city:

With median house prices being substantially more than the price caps in cities like Sydney, Melbourne, Canberra, Hobart and Brisbane, finding a property that qualifies – without moving 50 kilometres from the city centre – can be challenging.

Here’s our pick of the suburbs in which to buy if you want to qualify for the scheme.

SYDNEY

Sydney’s median house price is now $1.6 million on Domain data, having risen by $400,000 last year alone.

Finding any house under $800,000 is a tough gig and while the suburbs with median house prices in this range are all in the western or south-western suburbs, some are less far-flung than others.

Glenfield, with a median price of $771,500, is 31 kilometres, or about a 45-minute drive, from the city centre, while Doonside, with a median price of $761,000, is 33 kilometres out – about a 40-minute drive.

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12 Foreman Street, Glenfield NSW 2167

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The median price for a unit in Sydney is $802,255 – much closer to the price cap – which means there is far more choice in location for buyers who opt to buy a unit using this scheme.

There are plenty of suburbs with median unit prices within the cap limit, from the upper north shore to the inner west, the south and even the city centre, although they will be closer to the $800,000 mark than suburbs further out.

While units in Wiley Park and Lakemba have median prices of less than $400,000, first-home buyers will find units in central locations such as Ultimo, only 1.6 kilometres from the CBD, and Leichhardt, just 5.2 kilometres away, or Hillsdale, in the eastern suburbs and 9.4 kilometres from the city centre.

SOLD - $1,010,000

1207/39 Rhodes Street, Hillsdale NSW 2036

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MELBOURNE

House prices rose by about $170,000 in Melbourne last year to a record median of $1.1 million. Finding a house under the government’s price cap of $700,000 is a stretch, and many of the suburbs within that price range are a fair ride from the city centre.

Sunshine North, with a median house price of just under $700,000, is only 13 kilometres from the CBD and about a half-hour drive in the car. St Albans is another five minutes away by car but cheaper still, with a median price of $668,000.

SOLD - $660,000

1 Maroondah Court, St Albans VIC 3021

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Melbourne’s unit prices did not rise by nearly as much as houses last year and many are well within the cap of $700,000. The median price for a unit is now $593,387 on Domain data, and there are many suburbs to choose from in inner-city locations.

Sought-after suburbs like Malvern East and Caulfield have median unit prices under $700,000.

The mass exodus of international students from Melbourne’s CBD as the international borders closed during the pandemic, as well as locals who fled the locked-down city to regional areas, saw unit prices fall in some inner-city locations last year.

West Melbourne, St Kilda West, Brunswick West and Glen Iris all had price falls last year, placing them well under the $700,000 cap.

Cremorne and South Melbourne, both within walking distance of the CBD, have median unit prices under $700,000.

SOLD - $700,000

321/85 Market Street, South Melbourne VIC 3205

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BRISBANE

A cap of $600,000 would have sounded generous before the pandemic – Brisbane’s median house price in December 2020 was just under $630,000.

Fast-forward to 12 months later and the median house price had shot up to nearly $800,000, making house-hunting at less than $600,000 exponentially more difficult.

First-home buyers searching for a house in Brisbane using the government’s scheme with just a 5 per cent deposit are going to have to open their minds to suburbs they may not have otherwise considered.

Amazingly, Hemmant, in Brisbane’s eastern suburbs, has a median house price of less than $600,000 – and it’s just 10 kilometres from the CBD.

Other options include Acacia Ridge on the south side, Fitzgibbon on the north side, and Capalaba and Thorneside, also in the east.

SOLD - $760,000

18 Montana Drive, Capalaba QLD 4157

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When it comes to finding a unit under the price cap of $600,000, Brisbane first-home buyers are spoilt for choice.

Some of the city’s most sought-after suburbs, including Ascot, Paddington and St Lucia, all have median unit prices under the $600,000 cap.

First-home buyers can take their pick of apartment locations in chic inner-city locations like Fortitude Valley or, if they want more suburban options, suburbs like Ashgrove and Coorparoo also fall beneath the cap.

SOLD - $495,000

1/102 Rockbourne Terrace, Paddington QLD 4064

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PERTH

Perth is Australia’s most affordable capital city, with a median house price of $612,348. House prices rose there last year by 7.5 per cent, although its rate of growth was modest compared to the other capital cities which saw double-digit growth.

A price cap of $500,000 puts houses within reach for first-home buyers who want to take up the government’s scheme. A 5 per cent deposit on the maximum price a Perth buyer could pay would be just $25,000.

Better yet, many of the suburbs that fall on or under that $500,000 cap are within close proximity of the CBD.

West Perth and Highgate are within walking distance of the CBD, and suburbs like Belmont and Osborne Park are less than 7 kilometres from the city centre.

SOLD - $265,000

43 Grenville Street, Tuart Hill WA 6060

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ADELAIDE

Adelaide is currently the hottest property market in the nation, with demand for homes still well outstripping supply.

The median house price soared by nearly $160,000 last year to a record price of $731,547 – and that price is highly likely to have continued to rise into 2022, given the city’s strong auction clearance rates that have been topping every other capital city this month.

A Home Guarantee Scheme cap of $500,000 goes nowhere near as far as it would have pre-pandemic, but there are still suburbs within 10 kilometres of Adelaide’s CBD where the house median sits below that price point.

Most of them sit west of the city centre, with suburbs like Lightsview, Kilburn and St Clair falling under the $500,000 mark, but it’s Ascot Park, south of Adelaide’s CBD, that is the closest in proximity to the city centre.

SOLD - $460,000

9 Parna Lane, Lightsview SA 5085

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Family-orientated Mansfield Park with its large homes and leafy parks sits only 9 kilometres from Adelaide’s CBD.

HOBART

The picturesque capital of Australia’s Apple Isle was once a haven for first-home buyers seeking relief from the heady real estate prices of its mainland city counterparts but these days it’s one of the toughest housing markets to crack.

After Canberra, Hobart had the highest rate of house price growth in the entire nation last year. Within the space of 12 months, prices rose by more than $193,000.

The house median is now $752,110, so a cap of $500,000 on property purchases for first-home buyers leaves only a small choice of suburbs within commuting distance of Hobart’s city centre.

The suburb closest to the CBD is Risdon Vale, closely followed by Rokeby, although the supply of houses currently listed for sale is slim.

SOLD - $449,000

5 Fontain Circle, Rokeby TAS 7019

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Further out from the city centre are suburbs like Bridgewater, Brighton and New Norfolk, all with median house prices under $500,000.

SOLD - $425,000

58 Scott Road, Bridgewater TAS 7030

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