Outer suburbs in hot demand for first-home buyers, but inner-city apartments draw more attention: NAB

First-home buyers are flocking to the outer suburbs of our biggest cities for affordability, but new data shows a growing number are also turning back to inner-city apartment markets.

The inner suburbs of Surry Hills in Sydney, Richmond in Victoria and Fortitude Valley in Brisbane, are among the regions that have seen the biggest spike in first-home buyer activity, new NAB figures reveal.

First-home buyer lending across metro markets was up 13 per cent over the first four months of the year, compared with the previous four months, while regional activity dipped 4 per cent, the lending data shows. However, regional activity was up a whopping 84 per cent year on year, while metro activity was up 67 per cent.

NAB executive of home ownership Andy Kerr said first-home buyers appeared to be responding to price changes, with the bank’s list of hot spots changing significantly from December — only five postcodes Australia-wide were still among the fastest-growing first-home buyer markets.

“It’s been interesting to see activity slow in regional areas from the final few months of last year, but over a 12-month period it’s clear the sea and tree change has been incredibly popular for first-time buyers,” he said.

Growth in first-home buyer lending has been more localised than last year, with Victoria seeing the largest spike in activity — up 26 per cent by April on the previous four-month period — driven entirely by metro areas.

“Melbourne trailed all other cities in first-home buyer activity last year due largely to COVID-19 impacts and we have seen an element of catch-up this year,” Mr Kerr said.

NSW and the ACT were the only regions to see a decline over the four months to April, with first-home buyer activity down 4 per cent. However, activity there was up 76 per cent year on year, behind only Queensland and Western Australia with annual growth of 94 per cent and 92 per cent.

Nationwide lending to first-home buyers was up 67 per cent year on year, peaking in April, and up 9 per cent on the final four months of 2020.

In Sydney, middle to outer-ring postcodes covering suburbs such as Rhodes, Parramatta and St Mary’s, were among the first-home buyer hot spots, but suburbs such as Maroubra and Surry Hills also saw a strong uptick in activity.

Parramatta was the only postcode in Sydney that also made the list of hot spots in December, Mr Kerr said.

“The south-west has comparatively slowed off the significant demand we saw last year, while the strong performance of Surry Hills may be a bit of an outlier as growth in surrounding suburbs was modest,” he said.

In Melbourne, regions at the end of the train line — particularly those to the south-east with easy access to the Mornington Peninsula — continued to draw strong first-home buyer demand.

“This includes areas like Dandenong, Cranbourne and Frankston, which only just missed making the list and were among the top performers last year,” Mr Kerr said.

“Perhaps the biggest change is the signs of interest in inner-city areas like Richmond and Southbank, where apartments are likely to be the main purchases for first-time buyers.”

It was a similar story in Brisbane where the most notable change was the increase in interest in Fortitude Valley, where first-home buyers are most likely to be looking at apartments, Mr Kerr said. Broadbeach on the Gold Coast and Caloundra on the Sunshine Coast were also proving popular this year.

Apartments in and around the Perth and Adelaide CBDs also appear to be drawing more first-home buyers, albeit off a low base.