'Reality check': How much it now costs to buy a house close to the Sydney CBD

Home buyers hoping to snap up a house near Sydney’s CBD are in for a “reality check”, with new data showing even the cheapest inner suburbs now have medians well above $1 million.

After years of growth, the cheapest option within 10 kilometres of the city is Tempe, with a median house price of $1.21 million, an analysis of house price data by Domain found.

Those who want to compete in the inner suburbs are usually required to have a budget in the seven figures, Domain Group chief economist Andrew Wilson said.

“There’s a big premium to pay for distance … Affordability forces you to make choices.

“Tempe is fast evolving, with redevelopment happening in the suburb – but buying under a flight path is one of those choices,” Dr Wilson said.

A one-bedroom house with no parking at 12 Fanning Street is as entry-level as buyers will get. The home on 140 square metres has a buyer’s guide of $750,000 ahead of its March 8 auction. 

Vendors Martin Philpott and Tracey Brown, who snapped it up in 2000 for $205,000, initially planned to undertake an extension but then bought a nearby home almost identical to what they’d been intending to create.

“It’s a great area with a close-knit community, it’s convenient and there’s brilliant public transport,” he said.

Agency by Glenn Regan sales agent Louise Mitchell, said it is home buyers who have been priced out of neighbouring Newtown and Marrickville inspecting homes in Tempe.

Those unwilling to relinquish their dream of a house on the city’s doorstep will need to dig deep. 

The cheapest suburb within five kilometres of the CBD is Waterloo with a median house price of $1,219,000. 

Even one of the suburb’s smaller homes – a one-bedroom terrace on 95 square metres at 7 Kensington Street – sold for $1,068,000 in December 2016. It had the benefit of a parking space.

There was considerable interest from investors, out-of-town executives and first-home buyers with support from the bank of “mum and dad”, said First National Real Estate Spencer & Servi sales agent Annie Hodgson said.

“A young couple bought it with plans to renovate it,” Ms Hodgson said.

“Little homes in and around this area are highly sought after … a lot of people still want to live in a little house rather than an apartment and they’re rare to find.”

After years of growth in Sydney, Good Deeds buyer’s agent Veronica Morgan said a lot of home hunters would be in for a “reality check”. She suggested people would need to compromise between the size of the home itself and the location.

“They need to ask: How much space do I really need? I don’t think anybody wants a one-bedroom house, but if they’re hellbent on not living in an apartment then it might have to be a consideration,” she said.

Three-bedroom 26 Grimwood Street, Granville sold for $760,000 in January. Photo: Laing + Simmons

For those on a tighter budget, the 10- to 20-kilometre radius of the city is where prices become significantly lower – the cheapest suburb is in Sydney’s western suburb of Granville with a median house price of $780,000.

A renovated three-bedroom house in this area, at 26 Grimwood Street on 375 square metres, sold for $760,000 in January.

In the past two years, prices have risen in the area “dramatically,” Laing + Simmons Granville principal Ray Fayad said.

While many first-home buyers and first-time investors are coming into the area for good value houses under $800,000, they won’t be available for long, he said.

“We’re recommending some buyers who can’t afford it here go further west because there’s a $100,000 saving if they look further out to Seven Hills and Blacktown,” Mr Fayad said.

One of the cheapest houses on the market in Granville is three-bedroom 39 Woodville Road, with a price guide of $500,000 to $550,000 for its March auction.

The cheapest suburbs by distance from Sydney CBD 

• Under 5 kilometres: Waterloo, $1,219,000
• 5 to 10 kilometres: Tempe, $1.21 million
• 10 to 20 kilometres: Granville, $780,000
• 20 to 30 kilometres: Heckenbery, $604,000
• 30 to 40 kilometres: Emerton, $475,475
• 40 to 50 kilometres: Willmot, $450,000

Source: Domain Group