Australians buying a home hoping for a future profit have been warned against investing in outer suburbs as younger people prioritise lifestyle.
Property values last month soared at the fastest pace since October 1988 as price records were set in Sydney, Melbourne, Brisbane, Adelaide, Canberra and Hobart.
Buyers are piling into the market with Reserve Bank interest rates at a record low of 0.1 per cent and the big banks offering fixed-mortgage rates of less than 2 per cent.
However Brett Warren, the Brisbane director of buyer’s agent Metropole Property Strategists, said property was not guaranteed to keep appreciating, and buyers had a new set of investment rules they should follow.
‘The rules of property have changed and that’s the way people are choosing to live,’ he said.
Australians buying a home to make money are urged to avoid assuming a house in an outer suburb will surge in value because of a boom. Pictured are houses in western Sydney
Mr Warren said younger buyers are increasingly unwilling to move to an outer suburb a long way from the city centre and this trend was likely to continue for the next 15 years despite new working-from-home arrangements.
‘We’re not moving further and further out anymore so if you’re going to do that, you’re going to end up in a world of pain,’ he said.
‘Your investment is not going to perform as strongly and it’s going to be a low demand investment and really struggle to grow in value.’
Younger buyers instead preferred being close to shops and eateries, with low maintenance homes.
‘The next generation don’t want to keep moving further and further out. Instead, they’re moving further in,’ Mr Warren said.
‘They’re sacrificing the big backyard for balconies and small courtyards and low maintenance areas because they want to be close to the action, where they’re working, the lifestyle precincts, the coffee shops.’
Mr Warren said homes needed to be close to public transport, cafes and restaurants, boutique shops and green space to appeal to younger buyers.
‘It all must be within quick easy access by foot,’ he said.
Brett Warren, the Brisbane director of buyer’s agent Metropole Property Strategists, said younger buyers weren’t as willing to move a long way from the city for a backyard. Pictured is a house at Oran Park in Sydney’s outer south-west
At the other end of the age spectrum, Mr Warren said baby boomers wanted to be closer to the doctor and the dentist and remain in the city they are familiar with rather than seek out a retirement destination.
‘People who are retiring aren’t doing the sea change or tree change that was tipped many, many years ago,’ he said.
‘Many of them are continuing to work, just at a slower pace.
‘They’re wanting to live in the same kind of location – they’ve probably lived there for 20 or 30 years as well so they’re just selling their big four or five-bedroom home, the kids have moved out and they’re looking to downsize.’
Sydney’s median house price surged by 4.3 per cent in March, the fastest monthly gain since August 1988 to a pricey $1.112million, CoreLogic data showed.
Younger buyers instead preferred to sacrifice the big backyard for something closer to the city that was lower maintenance. Pictured is Manly on Sydney’s Northern Beaches near the city
House and apartment values together rose by 3.7 per cent to $928,028.
But suburbs near the city did even better with property values at Ryde, 15km north-west of the city, surged by 5.1 per cent to $1.464million.
The Northern Beaches, stretching north from Manly, saw an even firmer 5.4 per cent monthly surge to $1.887million while North Shore prices climbed 4.7 per cent to $1.397million.
Regional areas by the coast didn’t enjoy quite the same price growth but records were nonetheless set on the New South Wales Mid North Coast covering Port Macquarie ($521,130), the Southern Highlands ($700,513) and the Gold Coast in Queensland ($624,952).
Some outer suburbs did reach record highs including Blacktown in Sydney’s west ($762,627), Baulkham Hills and the Hawkesbury in the city’s outer north-west ($1.419million), the Mornington Peninsula south-east of Melbourne ($762,660) and the Moreton Bay area north of Brisbane ($474,973).