The best places for Melbourne first-home buyers are not close to the city

“Want house? Must travel” — that might be the new mantra for Melbourne’s first-home buyers, with new data showing the most affordable entry-level houses are dozens of kilometres away from the city centre, in the Yarra Valley or Melton.

The Domain Group’s first-home buyers report, released on Friday, names the town of Millgrove – 70 kilometres east of the CBD in the Yarra Valley – as the most affordable place in greater Melbourne to buy a house.

Melton South, Melton, Kurunjang and Melton West – all 44 to 46 kilometres west of the CBD – rounded out the top five most affordable suburbs for first-timers to buy the Australian dream.

The data follows an ongoing debate about housing affordability in the country, largely centred around the spending and saving habits of millennial first-home buyers.

Though it shows houses are still within reach in the state, it is clear first-home buyers will have to look significantly further from the city centre – Melbourne’s key job hub. Research has shown Melbourne’s jobs will continue to be highly concentrated in the CBD in coming years, with fears half of the city’s youth will be able to conveniently access the majority of jobs by 2031.

The drive from Millgrove to the city centre is about an hour and forty minutes. Public transport is closer to two hours each way. And it will take about an hour and 15 minutes to drive to Dandenong or Clayton, two of the city’s south-east job hubs.

“It is important that people are in a locality close to where they work, or if they are not, there needs to be good infrastructure and public transport to allow people to commute to work,” Domain Group chief data scientist Nicola Powell said. “As the population grows and housing sprawls even further, it puts more and more pressure on governments to provide that infrastructure for people to live a good life.”

The suburbs of Dallas, 19 kilometres north, and Werribee, 32 kilometres west, were the most affordable suburbs closest to the CBD with median house prices at $395,000 and $412,000, respectively.

The report determined the median price cut-off for Victorian first home buyers was $412,281, based on the Australian Bureau of Statistics’ average home loan size for first-home buyers over 12 months to March 2017, plus the recommended 20 per cent deposit and and adding relevant first home owner grants within Victoria.

The Andrews government in March announced it would double of the first-home owners’ grant to $20,000 in regional Victoria from July 1. It will also abolish stamp duty for first-home buyers on properties up to $600,000 and offer cuts to those up to $750,000.

Melbourne had just 14 suburbs under the median price for houses, but more than 70 suburbs for units.

Those happy to concede on the house and opt for a unit will also have more luck getting closer to the city, but have just two options within a 20 kilometres radius of the CBD. Albion, 15 kilometres west, has a median unit price of just $225,000 and 17 kilometres, Broadmeadows has a median of $320,000.

“Perhaps we need to look at, what do we define as a first home?” said Dr Powell. “For our parents and our parents’ parents, the definition was a single residential home on quarter-acre parcel of land. But perhaps we’re moving away from that and units will allow people to live close to the city centre.”

The picture for Melbourne first timers is clearly rosier than their compatriots north of the border. Sydney first-home buyers were mostly looking at between 46 kilometres to 107 kilometres from the city to get into the detached housing market.

For those who do wish to stay close to the centre of a capital city, the report suggests looking at Hobart, where the most affordable suburbs for houses are on average 19 kilometres from the CBD and seven kilometres for units.