Home buyers forced to purchase in outer Melbourne suburbs

Posted on March 7, 2009 by peter 
Filed under Australia Real Estate News · Tagged:

First time home buyers are being being forced to buy a record distance from the city as low interest rates and higher first homeowner grants push up prices in once affordable suburbs.

Only 316 of Melbourne’s 2720 suburbs and towns have a median price below the average first home buyer’s budget of $277,000, new figures released by home seeker website Our Home Sweet Home.

“It is driving up prices and pushing many first-time buyers out of the market.”

Many traditional first home buyer suburbs have moved out of reach, including Derrimut, Caroline Springs, Bacchus Marsh, East Geelong, Sunshine North and West, St Albans, Hallam, Dandenong South and Campbellfield.

The median price in Caroline Springs, for example, rose 16.4 per cent to $324,500 last year while in Derrimut it rose 7 per cent to $365,500.

Mr Boehm said many first-time buyers were being forced to look farther out to find a home they could afford.

Many were being forced to buy up to 40km from the city in places such as Cranbourne, Frankston North and Melton.

The figures show that between the September and December quarters last year 46 Victorian suburbs or towns moved out of reach of the average first home buyer despite across-the-board affordability improvements. Only 19 new areas became affordable.

“It is a bit of a surprise that more suburbs are coming off the list than coming on to it,” Mr Boehm said.

He expected strong buying by first home buyers to continue to push up prices in their favoured areas as long as interest rates remained low.

“Interest in properties in the $250,000 to $350,000 bracket is intense, with demand often outstripping supply, fuelling bidding wars in some areas,” said the firm’s chief executive, Peter Boehm.

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